You are on page 1of 57

CONTENTS

Corporate Information 2

Directors' Review 3

Unconsolidated Condensed Interim Statement of Financial Position 5

Unconsolidated Condensed Interim Profit and Loss Account 6

Unconsolidated Condensed Interim Statement of Comprehensive Income 7

Unconsolidated Condensed Interim Cash Flow Statement 8

Unconsolidated Condensed Interim Statement of Changes in Equity 9

Notes to the Unconsolidated Condensed Interim Financial Statements 10

Consolidated Financial Statements 31

1
CORPORATE INFORMATION

Board of Ali Raza D. Habib Chairman


Directors Abbas D. Habib Chief Executive & Managing Director
Anwar Haji Karim
Arshad Nasar
Murtaza H. Habib
Qumail R. Habib Executive Director
Safar Ali Lakhani
Shahid Ghaffar
Syed Mazhar Abbas
Syed Hasan Ali Bukhari

Audit Syed Mazhar Abbas Chairman


Committee Anwar Haji Karim Member
Arshad Nasar Member
Safar Ali Lakhani Member
Syed Hasan Ali Bukhari Member

Human Resource Syed Mazhar Abbas Chairman


& Remuneration Anwar Haji Karim Member
Committee Arshad Nasar Member
Murtaza H. Habib Member
Syed Hasan Ali Bukhari Member

Company
Secretary Mohammad Taqi Lakhani

Statutory KPMG Taseer Hadi & Co.


Auditors Chartered Accountants

Legal Liaquat Merchant Associates


Advisor Advocates and Corporate Legal Consultants

Registered 126-C, Old Bahawalpur Road,


Office Multan

Principal 2nd Floor, Mackinnons Building,


Office I.I. Chundrigar Road,
Karachi

Share Central Depository Company of Pakistan Ltd.


Registrar CDC House 99-B, Block-B, S.M.C.H.S.
Main Shahrah-e-Faisal, Karachi-74400.

Website www.bankalhabib.com
2
DIRECTORS’ REVIEW

On behalf of the Board of Directors of the Bank, it is my pleasure to present the un-audited
financial statements of Bank AL Habib Limited along with the un-audited consolidated
financial statements of Bank AL Habib Limited and the Bank’s Subsidiaries AL Habib Capital
Markets (Private) Limited and AL Habib Credit & Finance (Hong Kong) Limited for the nine
months ended September 30, 2016.

Alhamdolillah, during the period under review, the performance of the Bank continued to
be satisfactory. The deposits increased to Rs. 574.0 billion as compared to Rs. 516.2 billion
on December 31, 2015. In the same period, advances increased to Rs. 237.5 billion from
Rs. 207.3 billion, while investments increased to Rs. 406.5 billion from Rs. 356.6 billion.
The pre-tax profit of the Bank for the nine months period ended September 30, 2016 was
Rs. 9,386.3 million as compared to Rs. 9,053.2 million during the corresponding period last
year.

Your Bank now has a network of 590 offices, comprising 500 branches, 87 sub-branches,
and 3 Representative Offices. Our branch network includes 37 Islamic Banking Branches
and 3 Overseas Branches. Continuing with our branch expansion policy, the Bank intends
to open more branches during the year 2016.

Pakistan Credit Rating Agency Limited (PACRA) has maintained the Bank’s long term and
short term entity ratings at AA+ (Double A plus) and A1+ (A One plus), respectively. The
rating of our unsecured, subordinated TFC has also been maintained at AA (Double A).
These ratings denote a very low expectation of credit risk emanating from a very strong
capacity for timely payment of financial commitments.

We wish to thank our customers for their continued support and confidence, the State Bank
of Pakistan for their guidance, and local and foreign correspondents for their cooperation.
We also thank all our staff members for their sincere and dedicated services.

On behalf of the Board of Directors

Ali Raza D. Habib


Karachi: October 20, 2016 Chairman

3
4
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2016

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in '000)
ASSETS
Cash and balances with treasury banks 49,425,628 38,577,738
Balances with other banks 7 5,725,374 3,185,669
Lendings to financial institutions –00 3,992,794
Investments - net 8 406,480,106 356,649,003
Advances - net 9 237,487,681 207,288,608
Operating fixed assets 10 18,066,686 15,764,284
Deferred tax assets - net –00 –000
Other assets 8,313,177 14,254,372

725,498,652 639,712,468

LIABILITIES
Bills payable 11,671,333 8,665,462
Borrowings 11 80,732,088 62,592,299
Deposits and other accounts 12 574,043,263 516,213,178
Sub-ordinated loans 13 3,999,200 2,994,600
Liabilities against assets subject to finance lease –00 –000
Deferred tax liabilities - net 4,284,972 3,632,598
Other liabilities 10,079,647 7,757,673

684,810,503 601,855,810

NET ASSETS 40,688,149 37,856,658

REPRESENTED BY:
Share capital 11,114,254 11,114,254
Reserves 11,411,595 10,329,659
Unappropriated profit 10,745,239 10,253,920

33,271,088 31,697,833

Surplus on revaluation of assets - net of tax 14 7,417,061 6,158,825

40,688,149 37,856,658

CONTINGENCIES AND COMMITMENTS 15

The annexed notes 1 to 26 form an integral part of these unconsolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

5
UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
Note (Rupees in '000)
Mark-up / return / interest earned 16 36,277,449 37,716,805 11,440,775 12,284,207
Mark-up / return / interest expensed 17 (17,613,504) (19,436,734) (5,535,260) (5,991,736)
Net mark-up / return / interest income 18,663,945 18,280,071 5,905,515 6,292,471

Reversal / (provision) against non-performing


loans and advances - net 782,219 (1,359,297) 57,371 (227,974)
Provision for diminution in the value of investments –00 –00 –00 –00
Bad debts written-off directly –00 (34) –00 (34)
782,219 (1,359,331) 57,371 (228,008)
Net mark-up / return / interest income after provisions 19,446,164 16,920,740 5,962,886 6,064,463
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage income 1,847,005 1,669,088 587,678 523,793
Dividend income 18 471,811 518,412 82,596 132,023
Income from dealing in foreign currencies 457,384 575,864 127,613 105,196
Gain on sale / redemption of securities - net 54,922 228,500 9,165 (103,897)
Unrealised loss on revaluation of investments
classified as held for trading (9,187) (11,398) (9,192) (2,015)
Other income 517,266 475,902 159,296 153,163
Total non mark-up / interest income 3,339,201 3,456,368 957,156 808,263
22,785,365 20,377,108 6,920,042 6,872,726
NON MARK-UP / INTEREST EXPENSES
Administrative expenses (13,220,253) (11,083,314) (4,316,776) (3,781,236)
Other reversals / (provisions) / write-offs 26,499 (23,892) (4,550) –00
Other charges (205,277) (216,749) (51,906) (63,682)
Total non mark-up / interest expenses (13,399,031) (11,323,955) (4,373,232) (3,844,918)
9,386,334 9,053,153 2,546,810 3,027,808
Extra-ordinary / unusual items –00 –00 –00 –00
PROFIT BEFORE TAXATION 9,386,334 9,053,153 2,546,810 3,027,808

Taxation - Current (3,498,639) (3,402,312) (921,104) (1,099,037)


- Prior years (502,993) (500,484) –00 –00
- Deferred 42,206 151,718 14,768 17,719
(3,959,426) (3,751,078) (906,336) (1,081,318)
PROFIT AFTER TAXATION 5,426,908 5,302,075 1,640,474 1,946,490

(Rupees)
Basic and diluted earnings per share 19 4.88 4.77 1.48 1.75

The annexed notes 1 to 26 form an integral part of these unconsolidated condensed interim financial statements.
ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

6
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016

Nine months period ended Quarter ended


30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)

Profit after taxation for the period 5,426,908 5,302,075 1,640,474 1,946,490

Other comprehensive income

Items that are or may be reclassified subsequently


to profit and loss account

Exchange differences on translation of net


investment in foreign branches (3,446) 86,779 (5,106) 61,104

Items that will never be reclassified to profit


and loss account subsequently

Remeasurement of defined benefit plan –00 –00 –00 –00


Related tax charge –00 –00 –00 –00
–00 –00 –00 –00

Comprehensive income transferred to equity 5,423,462 5,388,854 1,635,368 2,007,594

Components of comprehensive income not


reflected in equity

Surplus / (deficit) on revaluation of available for sale securities 1,978,774 2,664,683 (180,598) 67,427
Related tax charge (692,572) (1,137,198) 63,209 (23,599)
1,286,202 1,527,485 (117,389) 43,828

Total comprehensive income 6,709,664 6,916,339 1,517,979 2,051,422

The annexed notes 1 to 26 form an integral part of these unconsolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director
7
UNCONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Note 30 September 30 September
2016 2015
CASH FLOW FROM OPERATING ACTIVITIES Note (Rupees in '000)
Profit before taxation 9,386,334 9,053,153
Less: Dividend income (471,811 ) (518,412)
8,914,523 8,534,741
Adjustments for:
Depreciation 1,175,134 835,764
Amortisation 64,261 62,596
(Reversal) / provision against non-performing loans and advances - net (782,219 ) 1,359,297
Gain on sale of operating fixed assets (64,729 ) (15,920)
Gain on sale / redemption of securities - net (54,922 ) (228,500)
Unrealised loss on held for trading securities 9,187 11,398
Charge for defined benefit plan 162,000 126,000
Charge for compensated absences 36,664 41,346
(Reversals) / provisions against off-balance sheet items (26,499 ) 23,892
518,877 2,215,873
9,433,400 10,750,614
Decrease / (increase) in operating assets
Lendings to financial institutions 3,992,794 –00
Advances - net (29,416,854 ) (20,608,721)
Other assets 6,009,278 3,107,955
(19,414,782 ) (17,500,766)
Increase in operating liabilities
Bills payable 3,005,871 275,944
Borrowings 17,620,936 29,329,792
Deposits and other accounts 57,830,085 35,260,540
Other liabilities - (excluding provision for taxation) 1,940,676 750,665
80,397,568 65,616,941
70,416,186 58,866,789
Income tax paid (3,853,986 ) (3,778,035)
Net cash generated from operating activities 66,562,200 55,088,754
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in securities (47,806,594 ) (43,978,151)
Net investments in associates –00 388,069
Dividend received 409,698 425,879
Investments in operating fixed assets (3,553,252 ) (2,467,511)
Sale proceeds from disposal of operating fixed assets 84,038 68,804
Net cash used in investing activities (50,866,110 ) (45,562,910)
CASH FLOW FROM FINANCING ACTIVITIES
Receipts / (repayments) of sub-ordinated loans 1,004,600 (748,500)
Dividend paid (3,828,502 ) (3,282,275)
Net cash used in financing activities (2,823,902 ) (4,030,775)
Exchange differences on translation of net investment in foreign branches (3,446 ) 86,779
Increase in cash and cash equivalents 12,868,742 5,581,848
Cash and cash equivalents at beginning of the period 41,758,103 37,879,971
Cash and cash equivalents at end of the period 20 54,626,845 43,461,819
The annexed notes 1 to 26 form an integral part of these unconsolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director
8
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Revenue Reserves
Share Statutory Foreign Currency Special General Unapp- Total
Capital Reserve Translation Reserve Reserve ropriated
Reserve Profit
(Rupees in ‘000)

Balance as at 01 January 2015 11,114,254 7,932,650 161,761 126,500 540,000 7,679,490 27,554,655
Total comprehensive income for the nine
months period ended 30 September 2015:
Profit after tax –00 –00 –00 –00 –00 5,302,075 5,302,075
Other comprehensive income –00 –00 86,779 –00 –00 –00 86,779
–00 –00 86,779 –00 –00 5,302,075 5,388,854
Transfer from surplus on revaluation of
fixed assets - net of tax –00 –00 –00 –00 –00 39,642 39,642
Transfer to statutory reserve –00 1,060,415 –00 –00 –00 (1,060,415 ) –00
Transaction with owners, recorded directly
in equity:
Cash dividend (Rs. 3 per share) –00 –00 –00 –00 –00 (3,334,276 ) (3,334,276)
Balance as at 30 September 2015 11,114,254 8,993,065 248,540 126,500 540,000 8,626,516 29,648,875
Total comprehensive income for the
quarter ended 31 December 2015:
Profit after tax –00 –00 –00 –00 –00 2,102,837 2,102,837
Other comprehensive income –00 –00 987 –00 –00 (68,080 ) (67,093 )
–00 –00 987 –00 –00 2,034,757 2,035,744
Transfer from surplus on revaluation of
fixed assets - net of tax –00 –00 –00 –00 –00 13,214 13,214
Transfer to statutory reserve –00 420,567 –00 –00 –00 (420,567 ) –00
Balance as at 31 December 2015 11,114,254 9,413,632 249,527 126,500 540,000 10,253,920 31,697,833
Total comprehensive income for the nine
months period ended 30 September 2016:
Profit after tax –00 –00 –00 –00 –00 5,426,908 5,426,908
Other comprehensive income –00 –00 (3,446) –00 –00 –00 (3,446 )
–00 –00 (3,446) –00 –00 5,426,908 5,423,462
Transfer from surplus on revaluation of
fixed assets - net of tax –00 –00 –00 –00 –00 39,782 39,782
Transfer to statutory reserve –00 1,085,382 –00 –00 –00 (1,085,382 ) –00
Transaction with owners, recorded directly
in equity:
Cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 (3,889,989 ) (3,889,989 )
Balance as at 30 September 2016 11,114,254 10,499,014 246,081 126,500 540,000 10,745,239 33,271,088

The annexed notes 1 to 26 form an integral part of these unconsolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director
9
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016

1. STATUS AND NATURE OF BUSINESS

Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on


15 October 1991 as a public limited company under the Companies Ordinance, 1984
having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place
of business in Karachi. Its shares are listed on Pakistan Stock Exchange Limited. It is
a scheduled bank principally engaged in the business of commercial banking with a
network of 500 branches (31 December 2015: 423 branches), 87 sub-branches (31
December 2015: 105 sub-branches) and 03 representative offices (31 December 2015:
03 representative offices). The branch network of the Bank includes 03 overseas
branches (31 December 2015: 03 overseas branches) and 37 Islamic Banking branches
(31 December 2015: 29 Islamic Banking branches).

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government regarding the shifting of
the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued
various circulars from time to time. Permissible forms of trade-related modes of financing
includes purchase of goods by banks from customers and immediate resale to them
at appropriate mark-up in price on deferred payment basis. The purchase and resale
arising under these arrangements are not reflected in these unconsolidated condensed
interim financial statements as such, but are restricted to the amount of facility actually
utilised and the appropriate portion of mark-up thereon. However, the Islamic Banking
branches of the Bank have complied with the requirements set out under the Islamic
Financial Accounting Standards (IFAS).

2.2 The financial results of the Islamic Banking branches have been consolidated in these
unconsolidated condensed interim financial statements for reporting purposes, after
eliminating material inter-branch transactions / balances. Key financial informations of
the Islamic Banking branches are disclosed in note 24.

3. STATEMENT OF COMPLIANCE

3.1 These unconsolidated condensed interim financial statements of the Bank have been
prepared, in accordance with the requirements of the International Accounting Standard
(IAS) 34 - 'Interim Financial Reporting', IFAS issued by the Institute of Chartered
Accountants of Pakistan, the requirements of the Companies Ordinance, 1984, the
Banking Companies Ordinance, 1962 and directives issued by the Securities and
Exchange Commission of Pakistan (SECP) and SBP. In case where requirements
differ, the provisions of the Companies Ordinance, 1984, the Banking Companies
Ordinance, 1962 and the said directives have been followed.

3.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of
IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40, "Investment

10
Property" for banking companies till further instructions. Further, according to the
notification of SECP dated 28 April 2008, International Financial Reporting Standard
(IFRS) - 7 "Financial Instruments: Disclosures" has not been made applicable for banks.
Accordingly, the requirements of these standards have not been considered in the
preparation of these unconsolidated condensed interim financial statements. However,
investments have been classified and valued in accordance with the requirements of
various circulars issued by SBP.

3.3 The disclosures made in these unconsolidated condensed interim financial statements
have been limited based on the format prescribed by SBP vide BSD Circular Letter No. 2,
dated 12 May 2004 and IAS 34 "Interim Financial Reporting". They do not include all
the information required in the annual financial statements, and these unconsolidated
condensed interim financial statements should be read in conjunction with the annual
financial statements of the Bank for the year ended 31 December 2015.

3.4 These are separate unconsolidated condensed interim financial statements of the Bank
in which investments in subsidiaries and associates are reported on the basis of direct
equity interest and are not consolidated or accounted for by using equity method of
accounting.

4. BASIS OF MEASUREMENT

4.1 Accounting convention

These unconsolidated condensed interim financial statements have been prepared


under the historical cost convention, except that certain fixed assets and non-banking
assets acquired in satisfaction of claims are stated at revalued amounts, certain
investments and commitments in respect of certain forward exchange contracts have
been marked to market and are carried at fair value and staff retirement benefits are
carried at present value.

4.2 Functional and presentation currency

These unconsolidated condensed interim financial statements are presented in Pak


Rupees which is the Bank's functional and presentation currency.

4.3 Accounting estimates and assumptions

The preparation of these unconsolidated condensed interim financial statements requires


management to make judgments, estimates and assumptions that effect the application
of policies and reported amounts of assets and liabilities, income and expenses. The
assumptions and estimates that are significant to these unconsolidated condensed
interim financial statements are the same as those disclosed in the annual financial
statements of the Bank for the year ended 31 December 2015.

11
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted for preparation of these unconsolidated condensed


interim financial statements are same as those applied in the preparation of annual
financial statements of the Bank for the year ended 31 December 2015 except for the
reclassification as required by SBP vide its BPRD Circular No. 1 of 2016, BPRD Circular
Letter No. 05 of 2016 and additional disclosures in respect of Islamic Index Screening
as required by Circular No. 14 of 2016 issued by SECP.

Non-banking assets acquired in satisfaction of claims:

Effective 1 January 2016, the Bank has changed its accounting policy for recording of
non-banking assets acquired in satisfaction of claims to comply with the requirements
of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its
BPRD Circular No. 1 of 2016, dated 1 January 2016. In line with the guidance provided
in the Regulations, the non-banking assets acquired in satisfaction of claims are carried
at revalued amounts less accumulated depreciation. These assets are revalued by
professionally qualified valuers to ensure that their net carrying value does not differ
materially from their fair value. A surplus arising on revaluation of property is credited
to the 'surplus on revaluation of fixed assets' account and any deficit arising on revaluation
is taken to profit and loss account directly. Legal fees, transfer costs and direct costs
of acquiring title to property is charged to profit and loss account and not capitalised.
Previously, non-banking assets acquired in satisfaction of claims were carried at cost
less impairment, if any. Had the accounting policy not been changed, non-banking
assets (included in Other Assets in the statement of financial position), surplus on
revaluation of assets and deferred tax liability - net would have been lower by Rs. 11.678
million, Rs. 11.676 million and Rs. 1.258 million respectively while profit after tax would
have been higher by Rs. 1.396 million.

6. FINANCIAL RISK MANAGEMENT

The financial risk management objectives and policies adopted by the Bank are consistent
with those disclosed in the annual financial statements of the Bank for the year ended
31 December 2015.

12
7. BALANCES WITH OTHER BANKS
These include Rs. 1,673.794 million (31 December 2015: Rs. 744.861 million) placed under Shariah permissible mode.
30 September 2016 (Un-audited) 31 December 2015 (Audited)
Held by Given as Total Held by Given as Total
Bank Collateral Bank Collateral
Note (Rupees in '000)

8. INVESTMENTS
8.1 Investments by type
Available for Sale Securities
Market Treasury Bills 169,094,771 59,077,940 228,172,711 96,543,319 39,361,572 135,904,891
Pakistan Investment Bonds 50,359,287 –00 50,359,287 60,095,104 –00 60,095,104
Foreign Currency Bonds 5,264,960 –00 5,264,960 4,043,886 –00 4,043,886
Sukuk Bonds 8,899,209 –00 8,899,209 6,983,848 –00 6,983,848
Fully paid-up ordinary shares - Listed 5,053,320 –00 5,053,320 4,018,649 –00 4,018,649
Fully paid-up ordinary shares - Unlisted 45,529 –00 45,529 45,529 –00 45,529
Term finance certificates - Listed 702,771 –00 702,771 302,972 –00 302,972
Term finance certificates - Unlisted 2,260,801 –00 2,260,801 2,946,686 –00 2,946,686
Units of mutual funds 1,600,000 –00 1,600,000 1,550,000 –00 1,550,000
243,280,648 59,077,940 302,358,588 176,529,993 39,361,572 215,891,565
Held to Maturity Securities 8.2
Pakistan Investment Bonds 90,984,462 –00 90,984,462 130,462,425 –00 130,462,425
Foreign Currency Bonds 2,389,557 –00 2,389,557 1,879,702 –00 1,879,702
Other Federal Government Securities 1,906,739 –00 1,906,739 1,825,278 –00 1,825,278
Sukuk Bonds 678,335 –00 678,335 696,890 –00 696,890
95,959,093 –00 95,959,093 134,864,295 –00 134,864,295
Held for Trading Securities
Fully paid-up ordinary shares - Listed 299,695 –00 299,695 –0 –00 –0
Associates
Habib Sugar Mills Limited 182,690 –00 182,690 182,690 –00 182,690
Habib Asset Management Limited 60,000 –00 60,000 60,000 –00 60,000
First Habib Income Fund 150,000 –00 150,000 150,000 –00 150,000
First Habib Stock Fund 10,000 –00 10,000 10,000 –00 10,000
First Habib Cash Fund 150,000 –00 150,000 150,000 –00 150,000
First Habib Islamic Balanced Fund 10,000 –00 10,000 10,000 –00 10,000
562,690 –00 562,690 562,690 –00 562,690
Subsidiaries
AL Habib Capital Markets
(Private) Limited 200,000 –00 200,000 200,000 –00 200,000
AL Habib Credit & Finance
(Hong Kong) Limited 127 –00 127 127 –00 127
200,127 –00 200,127 200,127 –00 200,127
Investments at cost 340,302,253 59,077,940 399,380,193 312,157,105 39,361,572 351,518,677
Less: Provision for diminution in
the value of investments (202,692) –00 (202,692) (202,692) –00 (202,692)
Investments (net of provisions) 340,099,561 59,077,940 399,177,501 311,954,413 39,361,572 351,315,985
Surplus on revaluation of available
for sale securities - net 14.2 7,268,367 43,425 7,311,792 5,213,270 119,748 5,333,018
Deficit on revaluation of held for
trading securities - net (9,187 ) –00 (9,187 ) –00 –00 –00
Total Investments 347,358,741 59,121,365 406,480,106 317,167,683 39,481,320 356,649,003
8.2 The aggregate market value of held to maturity securities as at 30 September 2016 amounted to Rs. 107,774 million (31 December 2015:
Rs. 146,376 million).
13
(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in '000)
9. ADVANCES
Loans, cash credits, running finances, etc.
– In Pakistan 195,426,754 171,210,373
– Outside Pakistan 16,396,958 14,648,449
211,823,712 185,858,822
Islamic financing and related assets - gross 9.4 & 24.2 13,133,766 11,982,735
Net investment in finance lease
– In Pakistan 7,275,255 4,297,187
– Outside Pakistan –00 –00
7,275,255 4,297,187
Bills discounted and purchased
(excluding market treasury bills)
– Payable in Pakistan 1,603,049 3,222,616
– Payable outside Pakistan 11,138,110 10,340,898
12,741,159 13,563,514
Advances - gross 244,973,892 215,702,258
Provision against non-performing loans and advances
– Specific provision 9.1 (4,555,721) (5,537,371)
– General provision against small enterprises and
consumer advances (as per SBP regulations) 9.2 (180,490) (126,279)
– General provision 9.3 (2,750,000) (2,750,000)
(7,486,211) (8,413,650)
Advances - net of provisions 237,487,681 207,288,608
9.1 Advances include Rs. 5,807.792 million (31 December 2015: Rs. 5,874.374 million) which have
been placed under non-performing status as detailed below:

30 September 2016 (Un-audited)


Classified advances Provision required Provision held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
(Rupees in '000)
Category of classification
Other assets especially
mentioned 49,313 –00 49,313 2,324 –00 2,324 2,324 –00 2,324
Substandard 1,523,268 –00 1,523,268 380,162 –00 380,162 380,162 –00 380,162
Doubtful 61,370 –00 61,370 16,800 –00 16,800 16,800 –00 16,800
Loss 3,231,292 942,549 4,173,841 3,213,886 942,549 4,156,435 3,213,886 942,549 4,156,435
4,865,243 942,549 5,807,792 3,613,172 942,549 4,555,721 3,613,172 942,549 4,555,721

14
31 December 2015 (Audited)
Classified advances Provision required Provision held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
(Rupees in '000)
Category of classification
Other assets especially
mentioned 3,335 –0 3,335 40 –0 40 40 –0 40
Substandard 43,810 –0 43,810 10,940 –0 10,940 10,940 –0 10,940
Doubtful 599,534 –0 599,534 299,767 –0 299,767 309,485 –0 309,485
Loss 4,280,034 947,661 5,227,695 4,269,245 947,661 5,216,906 4,269,245 947,661 5,216,906
4,926,713 947,661 5,874,374 4,579,992 947,661 5,527,653 4,589,710 947,661 5,537,371
9.2 General provision represents provision amounting to Rs. 132.829 million (31 December
2015: Rs. 100.618 million) against consumer finance portfolio and Rs. 47.661 million (31
December 2015: Rs. 25.661 million) against advances to small enterprises as required by
the Prudential Regulations issued by SBP. General provision against consumer finance
portfolio includes Rs. 3.996 million (31 December 2015: Rs. 1.784 million) permissible under
Shariah.
9.3 In line with its prudent policies, the Bank also made general provision against its loans and
advances portfolio. This general provision is in addition to the requirements of the Prudential
Regulations and as of 30 September 2016 amounts to Rs. 2,750 million (31 December
2015: Rs. 2,750 million).
9.4 These represents financing and related assets placed under Shariah permissible modes.
(Un-audited) (Audited)
30 Sepember 31 December
2016 2015
(Rupees in ‘000)
10. OPERATING FIXED ASSETS
Capital work-in-progress 925,532 703,896
Property and equipment 17,059,389 15,000,956
Intangible assets 81,765 59,432
18,066,686 15,764,284

(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
10.1The following additions were made during the period:

Leasehold land 315,532 219,840


Buildings on leasehold land 1,191,703 28,746
Improvements to leasehold buildings 242,236 166,059
Furniture and fixtures 138,271 98,422
Electrical, office and computer equipments 949,051 904,271
Vehicles 413,940 272,312
Intangible assets 80,929 26,355
3,331,662 1,716,005

15
(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
10.2 The written down value of fixed assets disposed off
during the period were as follows:
Improvements to leasehold buildings 8,221 35,224
Furniture and fixtures 631 2,128
Electrical, office and computer equipments 2,872 6,224
Vehicles 7,585 9,308
19,309 52,884

(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
11. BORROWINGS
Secured
Borrowings from SBP
– Export refinance scheme 16,369,828 19,118,954
– Long term financing for export oriented projects –00 4,246
– Long term financing for imported and locally
manufactured plant and machinery 4,714,503 3,953,374
– Financing facility for storage of agricultural produce 12,240 36,861
21,096,571 23,113,435
Repurchase agreement borrowings 59,111,360 39,473,560
80,207,931 62,586,995
Unsecured
Overdrawn nostros 524,157 5,304
80,732,088 62,592,299
12. DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits 124,662,914 120,268,519
Savings deposits 165,765,299 150,427,540
Current accounts - Remunerative 67,454,905 57,094,573
Current accounts - Non-remunerative 201,141,963 175,902,813
559,025,081 503,693,445
Financial institutions
Remunerative deposits 12,839,053 11,462,606
Non-remunerative deposits 2,179,129 1,057,127
15,018,182 12,519,733
574,043,263 516,213,178

16
12.1 Deposits include Rs. 18,856.513 million (31 December 2015: Rs. 14,718.557 million)
placed under permissible Shariah modes.
(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)
13. SUB-ORDINATED LOANS - unsecured

Term Finance Certificates (TFCs) - IV - (Unquoted) 13.1 –00 2,994,600


Term Finance Certificates (TFCs) - V - (Unquoted) 13.2 3,999,200 –000

3,999,200 2,994,600

13.1 During the period, the Bank exercised the Call Option of Term Finance Certificates-IV in
accordance with the Trust Deed and Terms and Conditions for the TFC issue, after
completing the regulatory requirements. Accordingly, the said TFCs were redeemed in
full on 30 June 2016.

13.2 Term Finance Certificates - V (Unquoted)

Total issue Rupees 4,000 million


Rating AA
Rate Payable six monthly at six months’ KIBOR plus 0.75%
without any floor and cap
Redemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each
Tenor 10 years
Maturity March 2026

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)

14. SURPLUS ON REVALUATION OF ASSETS


- NET OF TAX
Fixed assets / non-banking assets 14.1 2,664,397 2,692,363
Available for sale investments 14.2 4,752,664 3,466,462
7,417,061 6,158,825

17
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
14.1 Fixed assets / non-banking assets
Balance at beginning of the period / year 3,489,993 3,575,215
Surplus / (adjustment) on revaluation of
the Bank’s fixed assets / non-banking
assets during the period / year 13,825 (3,905)
Transfer to unappropriated profit in respect of
incremental depreciation charged during
the period / year (61,203) (81,317)
3,442,615 3,489,993

Related deferred tax liability on:


Balance at beginning of the period / year 797,630 826,092
Revaluation of the Bank’s fixed assets / non-banking
assets during the period / year 2,009 –00
Transfer to unappropriated profit in respect of
incremental depreciation charged during
the period / year (21,421) (28,462)
(778,218) (797,630)
2,664,397 2,692,363

14.2 Available for sale investments


Federal Government Securities 5,787,570 4,534,035
Fully paid-up ordinary shares 1,330,334 708,837
Term finance certificates, sukuk bonds and
foreign currency bonds (3,774) 1,388
Units of mutual funds 197,662 88,758
7,311,792 5,333,018
Related deferred tax liability (2,559,128) (1,866,556)
4,752,664 3,466,462

14.2.1 This includes deficit of Rs. 1.486 million (31 December 2015 surplus: Rs. 11.300
million) on revaluation of available for sale securities placed as per arrangements
permissible under Shariah.

18
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
15. CONTINGENCIES AND COMMITMENTS

15.1 Direct credit substitutes


Financial guarantees issued favouring:
– Financial institutions 723,241 462,800
– Others 3,854,207 5,086,805
4,577,448 5,549,605

15.2 Transaction-related contingent liabilities


Guarantees issued favouring:
– Government 32,812,676 29,798,948
– Financial institutions 580,888 668,750
– Others 10,518,483 6,743,423
43,912,047 37,211,121

15.3 Trade-related contingent liabilities


Letters of credit 88,635,361 77,847,579
Acceptances 14,533,323 13,547,110

103,168,684 91,394,689

15.4 Commitments in respect of forward lending


Commitments to extend credit (excluding
commitments that are unilaterally cancellable) 12,901,446 10,748,236
15.5 Commitments in respect of forward exchange
contracts

Purchase 48,399,628 46,760,182

Sale 29,476,967 28,769,804


The maturities of above contracts are spread over
the period upto one year.

15.6 Commitments for the acquisition of operating


fixed assets 661,819 635,075

19
15.7 Other contingencies
Income tax returns of the Bank have been submitted upto and including the Bank’s
financial year 2014. The income tax assessments of the Bank are complete upto tax
year 2013.

For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR)
has passed order u/s. 122(5A) of the Income Tax Ordinance, 2001 by disallowing
certain expenses. Subsequently, amended order was received from ACIR based on
a rectification application filed by the Bank resulting in net aggregate tax impact of
Rs. 797.233 million. The Bank has filed an appeal before the Commissioner Inland
Revenue (Appeals) against the above mentioned orders.

Commissioner Inland Revenue (Appeals) has passed appellate orders for tax years
2009 and 2011 by confirming disallowance of provision for non-performing loans,
other provisions and amortisation of intangible assets having an aggregate tax
impact of Rs. 15.372 million. The Bank has filed an appeal before Income Tax
Appellate Tribunal against the above referred orders.

The management, based on the opinion of its tax advisor, is confident about the
favourable outcome of the above matters.

(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)

16. MARK-UP / RETURN / INTEREST EARNED

On loans and advances to:


Customers 10,590,880 11,071,353 3,562,059 3,534,502
Financial institutions 112,234 90,225 37,976 32,614
10,703,114 11,161,578 3,600,035 3,567,116
On investments:
Available for sale securities 14,495,885 15,647,359 4,770,672 4,805,595
Held to maturity securities 10,864,893 10,751,809 3,000,582 3,856,647
25,360,778 26,399,168 7,771,254 8,662,242

On deposits with financial institutions 159,731 122,603 47,839 41,968


On securities purchased under
resale agreements 52,322 32,936 21,311 12,584
On call money lendings 1,504 520 336 297
36,277,449 37,716,805 11,440,775 12,284,207

16.1 These include Rs. 954.859 million (30 September 2015: Rs. 878.801 million) pertaining to Islamic
banking out of which Rs. 72.245 million (30 September 2015: Rs. 62.944 million) represents profit
from placements permissible under Shariah.
20
(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)
17. MARK-UP / RETURN / INTEREST EXPENSED
Deposits 12,949,628 14,304,665 4,284,139 4,381,137
Sub-ordinated loans 375,732 345,270 71,122 113,243
Repurchase agreement borrowings 3,227,864 3,668,085 847,657 1,147,418
Borrowings from SBP 462,820 774,600 129,326 209,751
Other borrowings 597,460 344,114 203,016 140,187
17,613,504 19,436,734 5,535,260 5,991,736
18. DIVIDEND INCOME
Available for sale
Allied Bank Limited 3,963 4,096 1,321 1,322
Attock Petroleum Limited 7,866 6,166 4,916 4,326
Attock Refinery Limited 500 –00 500 –00
Engro Corporation Limited 1,400 –00 1,400 –00
Engro Fertilizer Limited 800 –00 800 –00
Fatima Fertilizer Company Limited 312 –00 312 –00
Fauji Fertilizer Bin Qasim Limited –00 10,439 –00 3,341
Fauji Fertilizer Company Limited 30,553 29,636 7,207 5,643
First Habib Modaraba –00 647 –00 647
Habib Bank Limited 12,596 8,396 4,198 4,198
Habib Metropolitan Bank Limited 30,055 55,311 –00 30,055
Hub Power Company Limited 61,020 72,461 –00 41,951
Indus Motor Company Limited 836 –00 836 –00
International Industries Limited 238 211 185 132
International Steels Limited 7,029 –00 7,029 –00
Kot Addu Power Company Limited 27,287 15,840 –00 –00
Lalpir Power Limited 4,844 2,094 2,750 –00
MCB Bank Limited 12,000 4,753 4,000 1,584
Meezan Bank Limited –00 357 –00 208
National Investment (Unit) Trust 49,647 46,889 –00 –00
Nishat Chunian Power Limited 17,927 15,753 8,366 –00
NIT Government Bond Fund 36,461 67,089 –00 –00
NIT Government Treasury Fund 998 –00 –00 –00
NIT Income Fund 13,241 21,081 –00 –00
NIT Islamic Equity Fund 10,520 –00 –00 –00
Packages Limited 263 158 –00 –00
Pakgen Power Limited 9,473 4,407 5,066 –00
Pakistan Oilfields Limited 33,218 32,533 18,982 23,727
Pakistan Petroleum Limited 3,699 12,907 –00 6,576
Pakistan State Oil Company Limited 4,573 5,487 –00 –00
Pakistan Telecommunication Company Limited 6,033 –00 6,033 –00
PIML Income Fund –00 308 –00 –00
Rafhan Maize Products Company Limited 120 –00 120 –00
Shell Pakistan Limited 360 180 135 –00
Soneri Bank Limited 20,677 11,580 –00 –00
Standard Chartered Bank (Pakistan) Limited 6,366 7,162 2,387 2,387
United Bank Limited 10,550 8,630 3,165 3,165
425,425 444,571 79,708 129,262
21
(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)
Held for trading
Adamjee Insurance Company Limited –00 150 –00 150
Askari Bank Limited –00 150 –00 150
Dawood Hercules Corporation Limited 450 –00 450 –00
Engro Corporation Limited 1,500 400 525 200
Engro Fertilizer Limited 400 135 400 135
Fauji Cement Company Limited –00 750 –00 750
Fauji Fertilizer Bin Qasim Limited 305 –00 –00 –00
Faysal Bank Limited 100 –00 –00 –00
Indus Motor Company Limited 180 –00 180 –00
Lalpir Power Limited 100 –00 –00 –00
MCB Bank Limited –00 140 –00 –00
Pak Electron Limited 313 125 313 125
Pakgen Power Limited 175 –00 –00 –00
Pakistan Telecommunication Company Limited 1,000 949 200 949
Rafhan Maize Products Company Limited 72 –00 72 –00
United Bank Limited –00 302 –00 302
4,595 3,101 2,140 2,761
Associates
First Habib Cash Fund 8,005 21,579 –00 –00
First Habib Income Fund 9,500 20,357 –00 –00
First Habib Islamic Balanced Fund 338 1,388 338 –00
First Habib Stock Fund 410 4,000 410 –00
Habib Sugar Mills Limited 23,538 23,416 –00 –00
41,791 70,740 748 –00
471,811 518,412 82,596 132,023
19. BASIC AND DILUTED EARNINGS PER SHARE
Profit after taxation 5,426,908 5,302,075 1,640,474 1,946,490
(Number of shares in thousands)
Weighted average number of ordinary shares 1,111,425 1,111,425 1,111,425 1,111,425
(Rupees)
Basic and diluted earnings per share 4.88 4.77 1.48 1.75
(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
20. CASH AND CASH EQUIVALENTS
Cash and balances with treasury banks 49,425,628 39,414,248
Balances with other banks 5,725,374 4,782,001
Overdrawn nostros (524,157 ) (734,430)
54,626,845 43,461,819

22
21. FAIR VALUE OF FINANCIAL INSTRUMENTS
The table below analyses financial instruments measured at the end of reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised:
30 September 2016 (Un-audited)
Carrying amount Fair value
Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total
for sale trading maturity receivables financial financial
assets liabilities
(Rupees in ‘000)
On-balance sheet financial instruments
Financial assets measured at fair value
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds) 292,143,773 –00 –00 –00 –00 –00 292,143,773 –00 292,143,773 –00 292,143,773
Foreign Currency Bonds 1,695,662 –00 –00 –00 –00 –00 1,695,662 –00 1,695,662 –00 1,695,662
Fully paid-up ordinary shares - Listed 6,186,662 290,508 –00 –00 –00 –00 6,477,170 6,674,162 –00 –00 6,674,162
Units of mutual funds 1,797,662 –00 –00 –00 –00 –00 1,797,662 1,797,662 –00 –00 1,797,662
Term Finance Certificates - Listed 701,639 –00 –00 –00 –00 –00 701,639 701,639 –00 –00 701,639

Financial assets not measured at fair value


- Cash and bank balances with treasury banks –00 –00 –00 –00 49,425,628 –00 49,425,628 –00 –00 –00 –00
- Balances with other banks –00 –00 –00 –00 5,725,374 –00 5,725,374 –00 –00 –00 –00
- Lendings to financial institutions –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds + TFC + Others) 3,203,571 –00 95,282,960 –00 –00 –00 98,486,531 –00 107,096,101 –00 107,096,101
Foreign Currency Bonds –00 –00 521,149 –00 –00 –00 521,149 –00 522,793 –00 522,793
Sukuk Bonds 2,866,660 –00 154,984 –00 –00 –00 3,021,644 –00 –00 –00 –00
Fully paid-up ordinary shares - Un-listed 39,829 –00 –00 –00 –00 –00 39,829 –00 –00 –00 –00
Term Finance Certificates - Un-listed 832,230 –00 –00 –00 –00 –00 832,230 –00 –00 –00 –00
Associates
Listed shares –00 –00 –00 –00 182,690 –00 182,690 392,242 –00 –00 392,242
Mutual funds –00 –00 –00 –00 320,000 –00 320,000 301,152 –00 –00 301,152
Unlisted shares –00 –00 –00 –00 60,000 –00 60,000 –00 –00 –00 –00
Subsidiaries - Un-listed shares –00 –00 –00 –00 200,127 –00 200,127 –00 –00 –00 –00
- Advances –00 –00 –00 237,487,681 –00 –00 237,487,681 –00 –00 –00 –00
- Other assets –00 –00 –00 –00 6,776,455 –00 6,776,455 –00 –00 –00 –00
309,467,688 290,508 95,959,093 237,487,681 62,690,274 –00 705,895,244 9,866,857 401,458,329 –00 411,325,186

Financial liabilities not measured at fair value


- Deposits and other accounts –00 –00 –00 –00 –00 (574,043,263 ) (574,043,263 ) –00 –00 –00 –00
- Bills payable –00 –00 –00 –00 –00 (11,671,333 ) (11,671,333 ) –00 –00 –00 –00
- Borrowings –00 –00 –00 –00 –00 (80,732,088 ) (80,732,088 ) –00 –00 –00 –00
- Sub - ordinated loans –00 –00 –00 –00 –00 (3,999,200 ) (3,999,200 ) –00 –00 –00 –00
- Other liabilities –00 –00 –00 –00 –00 (7,120,151 ) (7,120,151 ) –00 –00 –00 –00
–00 –00 –00 –00 –00 (677,566,035 ) (677,566,035 ) –00 –00 –00 –00
309,467,688 290,508 95,959,093 237,487,681 62,690,274 (677,566,035 ) 28,329,209 9,866,857 401,458,329 –00 411,325,186

23
31 December 2015 (Audited)
Carrying amount Fair value
Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total
for sale trading maturity receivables financial financial
assets liabilities
(Rupees in ‘000)
On-balance sheet financial instruments
Financial assets measured at fair value
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds) 208,210,577 –00 –00 –00 –00 –00 208,210,577 –00 208,210,579 –00 208,210,579
Foreign Currency Bonds 627,606 –00 –00 –00 –00 –00 627,606 –00 627,606 –00 627,606
Fully paid-up ordinary shares - Listed 4,530,493 –00 –00 –00 –00 –00 4,530,493 4,727,485 –00 –00 4,727,485
Units of mutual funds 1,638,758 –00 –00 –00 –00 –00 1,638,758 1,638,758 –00 –00 1,638,758
Term Finance Certificates - Listed 705,764 –00 –00 –00 –00 –00 705,764 705,764 –00 –00 705,764
Financial assets not measured at fair value
- Cash and bank balances with treasury banks –00 –00 –00 –00 38,577,738 –00 38,577,738 –00 –00 –00 –00
- Balances with other banks –00 –00 –00 –00 3,185,669 –00 3,185,669 –00 –00 –00 –00
- Lendings to financial institutions –00 –00 –00 –00 3,992,794 –00 3,992,794 –00 –00 –00 –00
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds + TFC + Others) 1,964,286 –00 134,691,407 –00 –00 –00 136,655,693 –00 146,203,123 –00 146,203,123
Foreign Currency Bonds –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Sukuk Bonds 2,472,178 –00 172,888 –00 –00 –00 2,645,066 –00 –00 –00 –00
Fully paid-up ordinary shares - Un-listed 39,829 –00 –00 –00 –00 –00 39,829 –00 –00 –00 –00
Term Finance Certificates - Un-listed 832,400 –00 –00 –00 –00 –00 832,400 –00 –00 –00 –00
Associates
Listed shares –00 –00 –00 –00 182,690 –00 182,690 357,876 –00 –00 357,876
Mutual funds –00 –00 –00 –00 320,000 –00 320,000 306,171 –00 –00 306,171
Unlisted shares –00 –00 –00 –00 60,000 –00 60,000 –00 –00 –00 –00
Subsidiaries - Un-listed shares –00 –00 –00 –00 200,127 –00 200,127 –00 –00 –00 –00
- Advances –00 –00 –00 207,288,608 –00 –00 207,288,608 –00 –00 –00 –00
- Other assets –00 –00 –00 –00 13,128,891 –00 13,128,891 –00 –00 –00 –00
221,021,891 –00 134,864,295 207,288,608 59,647,909 –00 622,822,703 7,736,054 355,041,308 –00 362,777,362
Financial liabilities not measured at fair value
- Deposits and other accounts –00 –00 –00 –00 –00 (516,213,178 ) (516,213,178 ) –00 –00 –00 –00
- Bills payable –00 –00 –00 –00 –00 (8,665,462 ) (8,665,462 ) –00 –00 –00 –00
- Borrowings –00 –00 –00 –00 –00 (62,592,299 ) (62,592,299 ) –00 –00 –00 –00
- Sub - ordinated loans –00 –00 –00 –00 –00 (2,994,600 ) (2,994,600 ) –00 –00 –00 –00
- Other liabilities –00 –00 –00 –00 –00 (5,711,244 ) (5,711,244 ) –00 –00 –00 –00
–00 –00 –00 –00 –00 (596,176,783 ) (596,176,783 ) –00 –00 –00 –00
221,021,891 –00 134,864,295 207,288,608 59,647,909 (596,176,783 ) 26,645,920 7,736,054 355,041,308 –00 362,777,362
The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs).

24
22. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

The segment analysis with respect to business activity is as follows:


Nine months period ended 30 September 2016 (Un-audited)
Retail Commercial Inter Segment Total
Banking Banking Elimination
(Rupees in ‘000)

Total income 18,585,404 33,180,517 (12,149,271) 39,616,650


Total expenses (13,137,658) (29,241,929) 12,149,271 (30,230,316 )

Net income 5,447,746 3,938,588 –00 9,386,334

Segment assets (net of provisions) 580,505,706 681,825,368 (536,832,422) 725,498,652

Segment non performing loans 96,888 5,710,904 –00 5,807,792

Segment provision required 42,992 4,512,729 –00 4,555,721

Segment liabilities 578,513,577 643,129,348 (536,832,422) 684,810,503

Segment return on assets (ROA) (%)* 3.20% 4.87%

Segment cost of funds (%)* 2.27% 4.55%

Nine months period ended 30 September 2015 (Un-audited)


Retail Commercial Inter Segment Total
Banking Banking Elimination
(Rupees in ‘000)

Total income 17,718,210 36,230,125 (12,775,162) 41,173,173


Total expenses (13,578,944) (31,316,238) 12,775,162 (32,120,020 )

Net income 4,139,266 4,913,887 –00 9,053,153

Segment assets (net of provisions) 461,885,278 621,449,877 (434,544,795) 648,790,360

Segment non performing loans 43,403 5,845,281 –000 5,888,684

Segment provision required 38,468 5,108,970 –000 5,147,438

Segment liabilities 460,376,178 586,748,562 (434,544,795) 612,579,945

Segment return on assets (ROA) (%)* 3.84% 5.83%

Segment cost of funds (%)* 2.95% 5.34%

*These percentages have been computed based on closing assets / liabilities figures.

25
23. RELATED PARTY TRANSACTIONS
Related parties of the Bank comprise subsidiaries, associates (including entities having directors in common with the Bank),
retirement benefit funds, major shareholders, directors and key management personnel and their close family members.
Transactions with related parties of the Bank are carried out on an arm's length basis in terms of the policy as approved by
the Board of Directors. The transactions with employees of the Bank are carried out in accordance with the terms of their
employment.
Transactions for the period / year end balances outstanding as at the period / year end with related parties are summarised
as follows:
30 September 2016 (Un-audited)
Subsidiaries Associates Non Key Retirement Total
Executive Management Benefit
Directors Personnel Funds
(Rupees in ‘000)
Deposits
At beginning of the period 13,185 3,398,002 183,973 432,539 325,824 4,353,523
Placements during the period 405,177 86,660,504 1,948,629 1,852,249 2,458,128 93,324,687
Withdrawals during the period (390,754 ) (85,907,195 ) (1,830,272) (1,658,114) (2,155,098) (91,941,433)
At end of the period 27,608 4,151,311 302,330 626,674 628,854 5,736,777
Advances
At beginning of the period –00 978,041 144 54,478 –00 1,032,663
Given during the period 3,766,426 20,692,324 4,019 72,685 –00 24,535,454
Repaid during the period (3,766,426 ) (20,315,613 ) (2,688) (61,681) –00 (24,146,408)
At end of the period –00 1,354,752 1,475 65,482 –00 1,421,709
Investments
At beginning of the period 200,127 562,690 –00 –00 –00 762,817
Investments made during the period –00 –00 –00 –00 –00 –00
Investments redeemed during
the period –00 –00 –00 –00 –00 –00
At end of the period 200,127 562,690 –00 –00 –00 762,817

Contingencies and commitments –00 743,362 –00 –00 –00 743,362

31 December 2015 (Audited)


Deposits
At beginning of the year 98,058 3,037,277 185,609 401,895 49,441 3,772,280
Placements during the year 687,051 157,951,585 2,932,874 2,817,436 2,922,398 167,311,344
Withdrawals during the year (771,924 ) (157,590,860 ) (2,934,510) (2,786,792) (2,646,015) (166,730,101)
At end of the year 13,185 3,398,002 183,973 432,539 325,824 4,353,523
Advances
At beginning of the year –000 1,517,483 294 52,960 –00 1,570,737
Given during the year 10,948,669 22,453,719 2,790 72,596 –00 33,477,774
Repaid during the year (10,948,669 ) (22,993,161 ) (2,940) (71,078) –00 (34,015,848)
At end of the year –000 978,041 144 54,478 –00 1,032,663
Investments
At beginning of the year 200,127 865,977 –00 –00 –00 1,066,104
Investments made during the year –00 548,287 –00 –00 –00 548,287
Investments redeemed during
the year –00 (851,574 ) –00 –00 –00 (851,574)
At end of the year 200,127 562,690 –00 –00 –00 762,817

Contingencies and commitments –00 749,299 –00 –00 –00 749,299

26
Nine months period ended 30 September 2016 (Un-audited)
Subsidiaries Associates Non Key Retirement Total
Executive Management Benefit
Directors Personnel Funds
(Rupees in ‘000)
Forward purchase contracts –00 161,315 –00 –00 –00 161,315
Other receivable 13,907 –00 –00 –00 –00 13,907
Other payable 135 –00 –00 –00 –00 135
Unrealised loss on forward contracts –00 2,233 –00 –00 –00 2,233
Purchase of securities –00 –00 –00 –00 –00 –00
Purchase of mutual funds –00 –00 –00 –00 –00 –00
Sale of securities –00 25,243 –00 –00 615,758 641,001
Redemption of mutual funds –00 –00 –00 –00 –00 –00
Gain on sale of securities & mutual funds –00 –00 –00 –00 –00 –00
Mark-up earned 173 52,028 –00 2,451 –00 54,652
Mark-up expensed 344 137,807 10,480 21,088 25,105 194,824
Bank charges and commission 1 3,835 8 41 –00 3,885
Salaries and allowances –00 –00 –00 278,742 –00 278,742
Bonus –00 –00 –00 33,502 –00 33,502
Contribution to defined
contribution plan –00 –00 –00 10,847 –00 10,847
Contribution to defined
benefit plan –00 –00 –00 51,539 –00 51,539
Staff provident fund –00 –00 –00 –00 237,589 237,589
Staff gratuity fund –00 –00 –00 –00 162,000 162,000
Directors' fee –00 –00 6,600 –00 –00 6,600
Insurance claim received –00 12,175 –00 –00 –00 12,175
Insurance premium paid –00 131,654 –00 –00 –00 131,654
Dividend income –00 41,792 –00 –00 –00 41,792
Rental income 1,575 –00 –00 –00 –00 1,575
Rental paid –00 –00 –00 –00 –00 –00
Commission expensed 1,502 –00 –00 –00 –00 1,502
Donation –00 109,900 –00 –00 –00 109,900
Other expensed –00 5,104 –00 –00 –00 5,104
Other income 400 202 –00 –00 81 683

Nine months period ended 30 September 2015 (Un-audited)

Forward purchase contracts –00 –00 –00 –00 –00 –00


Other receivable 11,825 –00 –00 –00 –00 11,825
Other payable 135 –00 –00 –00 –00 135
Unrealised loss on forward contracts –00 –00 –00 –00 –00 –00
Purchase of securities –00 1,713 –00 –00 –00 1,713
Purchase of mutual funds –00 546,574 –00 –00 –00 546,574
Sale of securities –00 8,023 –00 –00 36,936 44,959
Redemption of mutual funds –00 936,356 –00 –00 –00 936,356
Gain on sale of securities & mutual funds –00 84,782 –00 –00 –00 84,782
Mark-up earned 583 82,857 3 2,336 –00 85,779
Mark-up expensed 714 128,616 11,180 22,632 3,481 166,623
Bank charges and commission 1 2,603 9 696 –00 3,309
Salaries and allowances –00 –00 –00 234,910 –00 234,910
Bonus –00 –00 –00 43,984 –00 43,984
Contribution to defined
contribution plan –00 –00 –00 10,722 –00 10,722
Contribution to defined
benefit plan –00 –00 –00 21,492 –00 21,492
Staff provident fund –00 –00 –00 –00 195,412 195,412
Staff gratuity fund –00 –00 –00 –00 126,000 126,000
Directors' fee –00 –00 5,675 –00 –00 5,675
Insurance claim received –00 11,681 –00 –00 –00 11,681
Insurance premium paid –00 129,468 –00 –00 –00 129,468
Dividend income –00 70,740 –00 –00 –00 70,740
Rental income 1,575 –00 –00 –00 –00 1,575
Rental paid –00 1,538 –00 –00 –00 1,538
Commission expensed 830 –00 –00 –00 –00 830
Donation –00 100 –00 –00 –00 100
Other expensed –00 3,213 –00 –00 –00 3,213
Other income 401 120 –00 –00 80 601

27
24. ISLAMIC BANKING BUSINESS

24.1 The Bank is operating 37 (31 December 2015: 29) Islamic Banking branches in Pakistan.
The statement of financial position of these branches as at 30 September 2016 is as follows:

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)
ASSETS
Cash and balances with treasury banks 1,449,826 882,606
Balances with and due from financial institutions 1,673,794 744,861
Investments 8,090,531 5,594,911
Islamic financing and related assets 24.2 13,129,770 11,980,951
Operating fixed assets 161,268 134,795
Other assets 243,020 244,172

24,748,209 19,582,296

LIABILITIES
Bills payable 72,087 8,452
Due to financial institutions 1,687,928 2,734,239
Deposits and other accounts 18,856,513 14,718,557
– Current accounts 6,703,703 4,797,701
– Saving accounts 5,698,658 3,675,740
– Term deposits 5,041,369 5,152,092
– Others 66,859 71,726
– Deposits from financial institutions-remunerative 1,345,211 1,019,316
– Deposits from financial institutions-non-remunerative 713 1,982
Due to Head office 311,432 1,490
Other liabilities 1,561,063 427,968
(22,489,023 ) (17,890,706)
NET ASSETS 2,259,186 1,691,590

REPRESENTED BY:
Islamic banking fund 2,200,000 1,500,000
Unremitted profit 60,672 180,290
2,260,672 1,680,290
(Deficit) / surplus on revaluation of assets (1,486 ) 11,300

2,259,186 1,691,590

28
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
24.2 Islamic financing and related assets
Murabaha 2,104,673 2,850,625
Net book value of assets / investments in ijarah under IFAS 2 1,321,469 695,688
Diminishing musharika 5,494,490 3,639,528
Musawama 646,313 274,033
Export refinance murabaha –000 32,351
Export refinance istisna 1,998,167 2,491,638
Istisna 618,821 568,922
Gross financing 12,183,933 10,552,785
Advance against murabaha 352,875 1,176,821
Advance against ijarah 596,958 253,129
Islamic financing and related assets - gross 13,133,766 11,982,735
Less: general provisioning against consumer financing (3,996 ) (1,784)
Islamic financing and related assets - net of provision 13,129,770 11,980,951

24.3 Islamic mode of financing


Financings / inventory / receivables 12,183,933 10,552,785
Advances 949,833 1,429,950
Less: general provisioning against consumer financing (3,996 ) (1,784)
13,129,770 11,980,951
24.4 The profit and loss account of the Bank's Islamic Banking branches for the nine months
period ended 30 September 2016 is as follows:
(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
Profit / return on financing and placements earned 954,859 878,801
Profit / return on deposits and other dues expensed (483,999) (477,134)
470,860 401,667

Provision against non-performing loans and advances (2,212 ) (532)


Net spread earned 468,648 401,135

OTHER INCOME
Fee, commission and brokerage income 50,734 30,404
Dividend income 1,654 –00
Income from dealing in foreign currencies 13,755 7,309
Other income 14,818 10,617
80,961 48,330

OTHER EXPENSES
Administrative expenses (488,937 ) (296,611)
PROFIT BEFORE TAXATION 60,672 152,854
24.5 Remuneration to Shariah Board / Advisor 3,726 1,800
29
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
24.6 CHARITY FUND
Opening balance 2,686 2,621
Additions during the period / year 2,115 2,686
Payment / utilisation during the period / year
Health –00 (1,021)
Social welfare (1,556 ) (1,600)
(1,556 ) (2,621 )
Closing balance 3,245 2,686

25. GENERAL

25.1 SBP has issued BPRD Circular Letter No. 5 dated February 29, 2016 regarding the classification
of Islamic financing and related assets. Accordingly, prior year numbers have been reclassified as
follows:

- Bai Muajjal of Rs. 1,825.278 million has been reclassified from Lendings to Financial Institutions
to Investments.

- Islamic receivables carried in Other assets of Rs. 1,429.950 million have been reclassified to
Advances.

No other major reclassifications were made during the period.

25.2 Figures have been rounded off to the nearest thousand rupees unless, otherwise stated.

26. DATE OF AUTHORISATION

These unconsolidated condensed interim financial statements were authorised for issue in the
Board of Directors' meeting held on 20 October 2016.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

30
Consolidated Financial Statements

Bank AL Habib Limited

and

Subsidiary Companies

31
CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2016

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in '000)
ASSETS
Cash and balances with treasury banks 49,425,631 38,577,760
Balances with other banks 7 5,769,967 3,204,284
Lendings to financial institutions –000 3,992,794
Investments - net 8 406,759,244 356,906,766
Advances - net 9 237,488,033 207,288,807
Operating fixed assets 10 18,085,601 15,782,394
Deferred tax assets - net –000 –000
Other assets 8,337,364 14,271,009

725,865,840 640,023,814

LIABILITIES
Bills payable 11,671,333 8,665,462
Borrowings 11 80,732,088 62,592,299
Deposits and other accounts 12 574,026,063 516,197,547
Sub-ordinated loans 13 3,999,200 2,994,600
Liabilities against assets subject to finance lease –000 –000
Deferred tax liabilities - net 4,281,090 3,627,612
Other liabilities 10,114,944 7,754,760

684,824,718 601,832,280

NET ASSETS 41,041,122 38,191,534

REPRESENTED BY:
Share capital 11,114,254 11,114,254
Reserves 11,411,190 10,329,233
Unappropriated profit 10,917,241 10,414,605
Equity attributable to the shareholders of the Holding company 33,442,685 31,858,092
Non-controlling interest 112,836 112,979
Total equity 33,555,521 31,971,071
Surplus on revaluation of assets - net of tax 14 7,485,601 6,220,463

41,041,122 38,191,534

CONTINGENCIES AND COMMITMENTS 15

The annexed notes 1 to 26 form an integral part of these consolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director
32
CONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
Note (Rupees in '000)
Mark-up / return / interest earned 16 36,289,531 37,730,030 11,444,831 12,288,663
Mark-up / return / interest expensed 17 (17,613,149) (19,436,613) (5,535,140) (5,991,529)
Net mark-up / return / interest income 18,676,382 18,293,417 5,909,691 6,297,134

Reversal / (provision) against non-performing


loans and advances - net 782,219 (1,359,297) 57,371 (227,974)
Provision for diminution in the value of investments –00 –00 –00 –00
Bad debts written-off directly –00 (34) –00 (34)
782,219 (1,359,331) 57,371 (228,008)
Net mark-up / return / interest income after provisions 19,458,601 16,934,086 5,967,062 6,069,126
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage income 1,866,742 1,699,164 594,912 530,855
Dividend income 18 433,641 452,189 82,152 134,229
Income from dealing in foreign currencies 457,384 575,864 127,613 105,196
Gain on sale / redemption of securities - net 58,229 146,497 9,204 (103,770)
Unrealised loss on revaluation of investments
classified as held for trading (9,187) (11,398) (9,192) (2,015)
Share of profit from associates 53,627 78,494 19,259 20,776
Other income 515,912 474,430 158,478 152,663
Total non mark-up / interest income 3,376,348 3,415,240 982,426 837,934
22,834,949 20,349,326 6,949,488 6,907,060
NON MARK-UP / INTEREST EXPENSES
Administrative expenses (13,255,321) (11,123,329) (4,327,397) (3,791,800)
Other reversals / (provisions) / write-offs 26,499 (23,892) (4,550) –00
Other charges (205,371) (216,888) (51,905) (63,659)
Total non mark-up / interest expenses (13,434,193) (11,364,109) (4,383,852) (3,855,459)
9,400,756 8,985,217 2,565,636 3,051,601
Extra-ordinary / unusual items –00 –00 –00 –00
PROFIT BEFORE TAXATION 9,400,756 8,985,217 2,565,636 3,051,601
Taxation - Current (3,500,818) (3,406,252) (921,203) (1,099,691)
- Prior years (502,993) (500,484) –00 –00
- Deferred 41,137 151,156 14,733 17,896
(3,962,674) (3,755,580) (906,470) (1,081,795)
PROFIT AFTER TAXATION 5,438,082 5,229,637 1,659,166 1,969,806
Attributable to:
Shareholders of the Holding company 5,438,225 5,227,485 1,659,554 1,968,922
Non-controlling interest (143) 2,152 (388) 884
5,438,082 5,229,637 1,659,166 1,969,806

(Rupees)
Basic and diluted earnings per share attributable to
equity holders of the Holding company 19 4.89 4.70 1.49 1.77
The annexed notes 1 to 26 form an integral part of these consolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

33
CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016

Nine months period ended Quarter ended


30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)

Profit after taxation for the period 5,438,082 5,229,637 1,659,166 1,969,806
Other comprehensive income
Items that are or may be reclassified subsequently
to profit and loss account
Exchange differences on translation of net
investment in foreign operations (3,425) 86,376 (5,089) 60,831
Items that will never be reclassified to profit
and loss account subsequently
Remeasurement of defined benefit plan –00 –00 –00 –00
Related tax charge –00 –00 –00 –00
–00 –00 –00 –00
Comprehensive income transferred to equity 5,434,657 5,316,013 1,654,077 2,030,637
Components of comprehensive income not
reflected in equity
Surplus / (deficit) on revaluation of available for sale securities 1,985,710 2,676,290 (171,966) 71,024
Related tax charge (692,606) (1,140,596) 63,271 (26,997)
1,293,104 1,535,694 (108,695) 44,027

Total comprehensive income 6,727,761 6,851,707 1,545,382 2,074,664

Attributable to:
Shareholders of the Holding company 6,726,421 6,847,545 1,545,407 2,073,352
Non-controlling interest 1,340 4,162 (25) 1,312
6,727,761 6,851,707 1,545,382 2,074,664

The annexed notes 1 to 26 form an integral part of these consolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

34
CONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Note 30 September 30 September
2016 2015
CASH FLOW FROM OPERATING ACTIVITIES Note (Rupees in '000)
Profit before taxation 9,400,756 8,985,217
Less: Dividend income (433,641 ) (452,189)
8,967,115 8,533,028
Adjustments for:
Depreciation 1,176,132 836,795
Amortisation 64,301 62,892
(Reversal) / provision against non-performing loans and advances - net (782,219 ) 1,359,297
Gain on sale of operating fixed assets (65,097 ) (15,935)
Gain on sale / redemption of securities - net (58,229 ) (146,497)
Unrealised loss on held for trading securities 9,187 11,398
Charge for defined benefit plan 162,000 126,000
Charge for compensated absences 36,664 41,346
Share of profit from associates (53,627 ) (78,494)
(Reversals) / provisions against off-balance sheet items (26,499 ) 23,892
462,613 2,220,694
9,429,728 10,753,722
Decrease / (increase) in operating assets
Lendings to financial institutions 3,992,794 –00
Advances - net (29,417,007 ) (20,608,695)
Other assets 6,001,729 3,133,248
(19,422,484 ) (17,475,447)
Increase in operating liabilities
Bills payable 3,005,871 275,944
Borrowings 17,620,936 29,329,792
Deposits and other accounts 57,828,516 35,334,857
Other liabilities - (excluding provision for taxation) 1,980,729 659,626
80,436,052 65,600,219
70,443,296 58,878,494
Income tax paid (3,858,437 ) (3,782,944)
Net cash generated from operating activities 66,584,859 55,095,550
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in securities (47,803,315 ) (43,983,508)
Net investments in associates 41,792 458,811
Dividend received 371,528 359,656
Investments in operating fixed assets (3,557,348 ) (2,468,184)
Sale proceeds from disposal of operating fixed assets 84,512 68,892
Net cash used in investing activities (50,862,831 ) (45,564,333)
CASH FLOW FROM FINANCING ACTIVITIES
Receipts / (repayments) of sub-ordinated loans 1,004,600 (748,500)
Dividend paid (3,828,502 ) (3,282,275)
Net cash used in financing activities (2,823,902 ) (4,030,775)
Exchange differences on translation of net investment in foreign operations (3,425 ) 86,376
Increase in cash and cash equivalents 12,894,701 5,586,818
Cash and cash equivalents at beginning of the period 41,776,740 37,887,729
Cash and cash equivalents at end of the period 20 54,671,441 43,474,547

The annexed notes 1 to 26 form an integral part of these consolidated condensed interim financial statements.
ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

35
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016
Attributable to the shareholders of the Holding Company
Revenue Reserves
Share Statutory Foreign Currency Special General Unappro Sub Non- Total
Capital Reserve Translation Reserve Reserve -priated Total controlling
Reserve Profit Interest
(Rupees in '000)
Balance as at 01 January 2015 11,114,254 7,932,650 161,761 126,500 540,000 7,912,345 27,787,510 113,969 27,901,479
Total comprehensive income for the nine
months period ended 30 September 2015:
Profit after tax –00 –00 –00 –00 –00 5,227,485 5,227,485 2,152 5,229,637
Other comprehensive income –00 –00 86,376 –00 –00 –00 86,376 –00 86,376
–00 –00 86,376 –00 –00 5,227,485 5,313,861 2,152 5,316,013
Transfer from surplus on revaluation
of fixed assets - net of tax –00 –00 –00 –00 –00 39,642 39,642 –00 39,642
Transfer to statutory reserve –00 1,060,415 –00 –00 –00 (1,060,415) –00 –00 –00
Transaction with owners,
recorded directly in equity:
Cash dividend (Rs. 3 per share) –00 –00 –00 –00 –00 (3,334,276) (3,334,276) –00 (3,334,276)
Balance as at 30 September 2015 11,114,254 8,993,065 248,137 126,500 540,000 8,784,781 29,806,737 116,121 29,922,858
Total comprehensive income for the
quarter ended 31 December 2015:
Profit after tax –00 –00 –00 –00 –00 2,105,257 2,105,257 (3,142) 2,102,115
Other comprehensive income –00 –00 964 –00 –00 (68,080) (67,116) –00 (67,116)
–00 –00 964 –00 –00 2,037,177 2,038,141 (3,142) 2,034,999
Transfer from surplus on revaluation
of fixed assets - net of tax –00 –00 –00 –00 –00 13,214 13,214 –00 13,214
Transfer to statutory reserve –00 420,567 –00 –00 –00 (420,567) –00 –00 –00
Balance as at 31 December 2015 11,114,254 9,413,632 249,101 126,500 540,000 10,414,605 31,858,092 112,979 31,971,071
Total comprehensive income for the nine
months period ended 30 September 2016:
Profit after tax –00 –00 –00 –00 –00 5,438,225 5,438,225 (143) 5,438,082
Other comprehensive income –00 –00 (3,425 ) –00 –00 –00 (3,425) –00 (3,425)
–00 –00 (3,425 ) –00 –00 5,438,225 5,434,800 (143) 5,434,657
Transfer from surplus on revaluation
of fixed assets - net of tax –00 –00 –00 –00 –00 39,782 39,782 –00 39,782
Transfer to statutory reserve –00 1,085,382 –00 –00 –00 (1,085,382) –00 –00 –00
Transaction with owners,
recorded directly in equity:
Cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 (3,889,989) (3,889,989) –00 (3,889,989)
Balance as at 30 September 2016 11,114,254 10,499,014 245,676 126,500 540,000 10,917,241 33,442,685 112,836 33,555,521

The annexed notes 1 to 26 form an integral part of these consolidated condensed interim financial statements.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director
36
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016

1. STATUS AND NATURE OF BUSINESS

1.1 The Group comprises of:

Holding company
- Bank AL Habib Limited

Subsidiaries
- AL Habib Capital Markets (Private) Limited
- AL Habib Credit & Finance (Hong Kong) Limited

1.2 Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on
15 October 1991 as a public limited company under the Companies Ordinance, 1984
having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place
of business in Karachi. Its shares are listed on Pakistan Stock Exchange Limited. It is
a scheduled bank principally engaged in the business of commercial banking with a
network of 500 branches (31 December 2015: 423 branches), 87 sub-branches (31
December 2015: 105 sub-branches) and 03 representative offices (31 December
2015: 03 representative offices). The branch network of the Bank includes 03 overseas
branches (31 December 2015: 03 overseas branches) and 37 Islamic Banking
branches (31 December 2015: 29 Islamic Banking branches).

1.3 The Bank has invested in 66.67% shares of AL Habib Capital Markets (Private)
Limited. The Company was incorporated in Pakistan on 23 August 2005 as a private
limited company under the Companies Ordinance,1984. The Company is a corporate
member of the Pakistan Stock Exchange Limited and is engaged in equity, money
market and foreign exchange brokerage services, equity research, corporate financial
advisory and consultancy services.

1.4 AL Habib Credit & Finance (Hong Kong) Limited is a wholly owned subsidiary of the
Bank. It is a limited liability company incorporated and domiciled in Hong Kong. The
Company has not commenced operations and is in the process of obtaining a Deposit
Taking Companies license from the Hong Kong Monetary Authority.

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government regarding the shifting of
the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued
various circulars from time to time. Permissible forms of trade-related modes of
financing includes purchase of goods by banks from customers and immediate resale
to them at appropriate mark-up in price on deferred payment basis. The purchase and
resale arising under these arrangements are not reflected in these consolidated
condensed interim financial statements as such, but are restricted to the amount of
facility actually utilised and the appropriate portion of mark-up thereon. However, the
Islamic Banking branches of the Bank have complied with the requirements set out
under the Islamic Financial Accounting Standards (IFAS).
37
2.2 The financial results of the Islamic Banking branches have been consolidated in these
consolidated condensed interim financial statements for reporting purposes, after
eliminating material inter-branch transactions / balances. Key financial information of
the Islamic Banking branches are disclosed in note 24.

3. STATEMENT OF COMPLIANCE

3.1 These consolidated condensed interim financial statements of the Group have been
prepared, in accordance with the requirements of the International Accounting
Standard (IAS) 34 - 'Interim Financial Reporting', IFAS issued by the Institute of
Chartered Accountants of Pakistan, the requirements of the Companies Ordinance,
1984, the Banking Companies Ordinance,1962 and directives issued by the Securities
and Exchange Commission of Pakistan (SECP) and SBP. In case where requirements
differ, the provisions of the Companies Ordinance, 1984, the Banking Companies
Ordinance, 1962 and the said directives have been followed.

3.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of
IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40,
"Investment Property" for banking companies till further instructions. Further,
according to the notification of SECP dated 28 April 2008, International Financial
Reporting Standard (IFRS) - 7 "Financial Instruments: Disclosures" has not been made
applicable for banks. Accordingly, the requirements of these standards have not been
considered in the preparation of these consolidated condensed interim financial
statements. However, investments have been classified and valued in accordance with
the requirements of various circulars issued by SBP.

3.3 The disclosures made in these consolidated condensed interim financial statements
have been limited based on the format prescribed by SBP vide BSD Circular Letter No. 2,
dated 12 May 2004 and IAS 34 "Interim Financial Reporting". They do not include all
the information required in the annual financial statements, and these consolidated
condensed interim financial statements should be read in conjunction with the annual
financial statements of the Group for the year ended 31 December 2015.

4. BASIS OF MEASUREMENT

4.1 Accounting convention

These consolidated condensed interim financial statements have been prepared under
the historical cost convention, except that certain fixed assets and non-banking assets
acquired in satisfaction of claims are stated at revalued amounts, certain investments
and commitments in respect of certain forward exchange contracts have been marked
to market and are carried at fair value and staff retirement benefits are carried at
present value.

4.2 Functional and presentation currency

These consolidated condensed interim financial statements are presented in Pak


Rupees which is the Group's functional currency and presentation currency.

38
4.3 Accounting estimates and assumptions

The preparation of these consolidated condensed interim financial statements requires


management to make judgments, estimates and assumptions that effect the
application of policies and reported amounts of assets and liabilities, income and
expenses. The assumptions and estimates that are significant to these consolidated
condensed interim financial statements are the same as those disclosed in the annual
financial statements of the Group for the year ended 31 December 2015.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted for preparation of these consolidated condensed


interim financial statements are same as those applied in the preparation of annual
financial statements of the Group for the year ended 31 December 2015 except for the
reclassification as required by SBP vide its BPRD Circular No. 1 of 2016, BPRD
Circular Letter No. 05 of 2016 and additional disclosures in respect of Islamic Index
Screening as required by Circular No. 14 of 2016 issued by SECP.

Non-banking assets acquired in satisfaction of claims:

Effective 1 January 2016, the Bank has changed its accounting policy for recording of
non-banking assets acquired in satisfaction of claims to comply with the requirements
of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its
BPRD Circular No. 1 of 2016, dated 1 January 2016. In line with the guidance provided
in the Regulations, the non-banking assets acquired in satisfaction of claims are
carried at revalued amounts less accumulated depreciation. These assets are
revalued by professionally qualified valuers to ensure that their net carrying value does
not differ materially from their fair value. A surplus arising on revaluation of property is
credited to the 'surplus on revaluation of fixed assets' account and any deficit arising
on revaluation is taken to profit and loss account directly. Legal fees, transfer costs and
direct costs of acquiring title to property is charged to profit and loss account and not
capitalised. Previously, non-banking assets acquired in satisfaction of claims were
carried at cost less impairment, if any. Had the accounting policy not been changed,
non-banking assets (included in Other Assets in the statement of financial position),
surplus on revaluation of assets and deferred tax liability - net would have been lower
by Rs. 11.678 million, Rs. 11.676 million and Rs. 1.258 million respectively while profit
after tax would have been higher by Rs. 1.396 million.

6. FINANCIAL RISK MANAGEMENT

The financial risk management objectives and policies adopted by the Bank are
consistent with those disclosed in the annual financial statements of the Bank for the
year ended 31 December 2015.

39
7. BALANCES WITH OTHER BANKS
These include Rs. 1,673.794 million (31 December 2015: Rs. 744.861 million) placed under Shariah permissible mode.
30 September 2016 (Un-audited) 31 December 2015 (Audited)
Held by Given as Total Held by Given as Total
Group Collateral Group Collateral
Note (Rupees in '000)
8. INVESTMENTS
8.1 Investments by type
Available for Sale Securities
Market Treasury Bills 169,094,771 59,077,940 228,172,711 96,543,319 39,361,572 135,904,891
Pakistan Investment Bonds 50,504,214 –00 50,504,214 60,240,211 –00 60,240,211
Foreign Currency Bonds 5,264,960 –00 5,264,960 4,043,886 –00 4,043,886
Sukuk Bonds 8,899,209 –00 8,899,209 6,983,848 –00 6,983,848
Fully paid-up ordinary shares - Listed 5,106,890 –00 5,106,890 4,074,462 –00 4,074,462
Fully paid-up ordinary shares - Unlisted 70,814 –00 70,814 70,814 –00 70,814
Term finance certificates - Listed 702,771 –00 702,771 302,972 –00 302,972
Term finance certificates - Unlisted 2,260,801 –00 2,260,801 2,946,686 –00 2,946,686
Units of mutual funds 1,600,000 –00 1,600,000 1,550,000 –00 1,550,000
243,504,430 59,077,940 302,582,370 176,756,198 39,361,572 216,117,770
Held to Maturity Securities 8.2
Pakistan Investment Bonds 90,984,462 –00 90,984,462 130,462,425 –00 130,462,425
Foreign Currency Bonds 2,389,557 –00 2,389,557 1,879,702 –00 1,879,702
Other Federal Government Securities 1,906,739 –00 1,906,739 1,825,278 –00 1,825,278
Sukuk Bonds 678,335 –00 678,335 696,890 –00 696,890
95,959,093 –00 95,959,093 134,864,295 –00 134,864,295
Held for Trading Securities
Fully paid-up ordinary shares - Listed 299,695 –00 299,695 –00 –00 –00
Associates
Habib Sugar Mills Limited 416,191 –00 416,191 396,615 –00 396,615
Habib Asset Management Limited 83,965 –00 83,965 84,236 –00 84,236
First Habib Income Fund 138,553 –00 138,553 142,719 –00 142,719
First Habib Stock Fund 10,659 –00 10,659 9,534 –00 9,534
First Habib Cash Fund 141,516 –00 141,516 144,106 –00 144,106
First Habib Islamic Balanced Fund 10,424 –00 10,424 9,812 –00 9,812
801,308 –00 801,308 787,022 –00 787,022

Investments at cost 340,564,526 59,077,940 399,642,466 312,407,515 39,361,572 351,769,087


Less: Provision for diminution in
the value of investments (213,185) –00 (213,185) (213,185) –00 (213,185)

Investments (net of provisions) 340,351,341 59,077,940 399,429,281 312,194,330 39,361,572 351,555,902


Surplus on revaluation of available
for sale securities - net 7,295,725 43,425 7,339,150 5,231,116 119,748 5,350,864
Deficit on revaluation of held
for trading securities - net (9,187 ) –00 (9,187 ) –00 –00 –00
Total Investments 347,637,879 59,121,365 406,759,244 317,425,446 39,481,320 356,906,766

8.2 The aggregate market value of held to maturity securities as at 30 September 2016 amounted to Rs. 107,774 million (31 December
2015: Rs. 146,376 million).

40
(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in '000)
9. ADVANCES
Loans, cash credits, running finances, etc.
– In Pakistan 195,427,106 171,210,572
– Outside Pakistan 16,396,958 14,648,449
211,824,064 185,859,021
Islamic financing and related assets - gross 9.4 & 24.2 13,133,766 11,982,735
Net investment in finance lease
– In Pakistan 7,275,255 4,297,187
– Outside Pakistan –00 –00
7,275,255 4,297,187
Bills discounted and purchased
(excluding market treasury bills)
– Payable in Pakistan 1,603,049 3,222,616
– Payable outside Pakistan 11,138,110 10,340,898
12,741,159 13,563,514
Advances - gross 244,974,244 215,702,457
Provision against non-performing loans and advances
– Specific provision 9.1 (4,555,721) (5,537,371)
– General provision against small enterprises and
consumer advances (as per SBP regulations) 9.2 (180,490) (126,279)
– General provision 9.3 (2,750,000) (2,750,000)
(7,486,211) (8,413,650)
Advances - net of provisions 237,488,033 207,288,807
9.1 Advances include Rs. 5,807.792 million (31 December 2015: Rs. 5,874.374 million) which have
been placed under non-performing status as detailed below:

30 September 2016 (Un-audited)


Classified advances Provision required Provision held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
(Rupees in '000)
Category of classification
Other assets especially
mentioned 49,313 –00 49,313 2,324 –00 2,324 2,324 –00 2,324
Substandard 1,523,268 –00 1,523,268 380,162 –00 380,162 380,162 –00 380,162
Doubtful 61,370 –00 61,370 16,800 –00 16,800 16,800 –00 16,800
Loss 3,231,292 942,549 4,173,841 3,213,886 942,549 4,156,435 3,213,886 942,549 4,156,435
4,865,243 942,549 5,807,792 3,613,172 942,549 4,555,721 3,613,172 942,549 4,555,721

41
31 December 2015 (Audited)
Classified advances Provision required Provision held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
(Rupees in '000)
Category of classification
Other assets especially
mentioned 3,335 –0 3,335 40 –0 40 40 –0 40
Substandard 43,810 –0 43,810 10,940 –0 10,940 10,940 –0 10,940
Doubtful 599,534 –0 599,534 299,767 –0 299,767 309,485 –0 309,485
Loss 4,280,034 947,661 5,227,695 4,269,245 947,661 5,216,906 4,269,245 947,661 5,216,906
4,926,713 947,661 5,874,374 4,579,992 947,661 5,527,653 4,589,710 947,661 5,537,371
9.2 General provision represents provision amounting to Rs. 132.829 million (31 December
2015: Rs. 100.618 million) against consumer finance portfolio and Rs. 47.661 million (31
December 2015: Rs. 25.661 million) against advances to small enterprises as required by
the Prudential Regulations issued by SBP. General provision against consumer finance
portfolio includes Rs. 3.996 million (31 December 2015: Rs. 1.784 million) permissible under
Shariah.
9.3 In line with its prudent policies, the Bank also made general provision against its loans and
advances portfolio. This general provision is in addition to the requirements of the Prudential
Regulations and as of 30 September 2016 amounts to Rs. 2,750 million (31 December
2015: Rs. 2,750 million).
9.4 These represents financing and related assets placed under Shariah permissible modes.
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
10. OPERATING FIXED ASSETS
Capital work-in-progress 925,532 703,896
Property and equipment 17,068,722 15,009,585
Intangible assets 91,347 68,913
18,085,601 15,782,394

(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
10.1The following additions were made during the period:

Leasehold land 315,532 219,840


Buildings on leasehold land 1,191,703 28,746
Improvements to leasehold buildings 242,236 166,059
Furniture and fixtures 138,944 98,464
Electrical, office and computer equipments 949,051 904,530
Vehicles 415,074 272,488
Intangible assets 81,070 26,551
3,333,610 1,716,678

42
(Un-audited)
Nine months period ended
30 September 30 Setpember
2016 2015
(Rupees in ‘000)
10.2 The written down value of fixed assets disposed off
during the period were as follows:
Improvements to leasehold buildings 8,221 35,224
Furniture and fixtures 737 2,128
Electrical, office and computer equipments 2,872 6,255
Vehicles 7,585 9,350
19,415 52,957

(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
11. BORROWINGS
Secured
Borrowings from SBP
– Export refinance scheme 16,369,828 19,118,954
– Long term financing for export oriented projects –00 4,246
– Long term financing for imported and locally
manufactured plant and machinery 4,714,503 3,953,374
– Financing facility for storage of agricultural produce 12,240 36,861
21,096,571 23,113,435
Repurchase agreement borrowings 59,111,360 39,473,560
80,207,931 62,586,995
Unsecured
Overdrawn nostros 524,157 5,304
80,732,088 62,592,299
12. DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits 124,662,914 120,268,519
Savings deposits 165,765,299 150,427,540
Current accounts - Remunerative 67,454,905 57,094,573
Current accounts - Non-remunerative 201,141,963 175,902,813
559,025,081 503,693,445
Financial institutions
Remunerative deposits 12,823,364 11,451,951
Non-remunerative deposits 2,177,618 1,052,151
15,000,982 12,504,102
574,026,063 516,197,547

43
12.1 Deposits include Rs. 18,856.513 million (31 December 2015: Rs. 14,718.557 million)
placed under permissible Shariah modes.
(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)
13. SUB-ORDINATED LOANS - unsecured

Term Finance Certificates (TFCs) - IV - (Unquoted) 13.1 –00 2,994,600


Term Finance Certificates (TFCs) - V - (Unquoted) 13.2 3,999,200 –000

3,999,200 2,994,600

13.1 During the period, the Bank exercised the Call Option of Term Finance Certificates-IV in
accordance with the Trust Deed and Terms and Conditions for the TFC issue, after
completing the regulatory requirements. Accordingly, the said TFCs were redeemed in
full on 30 June 2016.

13.2 Term Finance Certificates - V (Unquoted)

Total issue Rupees 4,000 million


Rating AA
Rate Payable six monthly at six months’ KIBOR plus 0.75%
without any floor and cap
Redemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each
Tenor 10 years
Maturity March 2026

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)

14. SURPLUS ON REVALUATION OF ASSETS


- NET OF TAX
Fixed assets / non-banking assets 14.1 2,664,397 2,692,363
Available for sale investments 14.2 4,821,204 3,528,100
7,485,601 6,220,463

44
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
14.1 Fixed assets / non-banking assets
Balance at beginning of the period / year 3,489,993 3,575,215
Surplus / (adjustment) on revaluation of
the Bank’s fixed assets / non-banking
assets during the period / year 13,825 (3,905)
Transfer to unappropriated profit in respect of
incremental depreciation charged during
the period / year (61,203) (81,317)
3,442,615 3,489,993

Related deferred tax liability on:


Balance at beginning of the period / year 797,630 826,092
Revaluation of the Bank’s fixed assets / non-banking
assets during the period / year 2,009 –00
Transfer to unappropriated profit in respect of
incremental depreciation charged during
the period / year (21,421) (28,462)
(778,218) (797,630)
2,664,397 2,692,363

14.2 Available for sale investments


Federal Government Securities 5,793,446 4,543,743
Fully paid-up ordinary shares 1,346,786 716,974
Term finance certificates, sukuk bonds,
foreign currency bonds and others 46,454 49,163
Units of mutual funds 197,662 88,758
7,384,348 5,398,638
Related deferred tax liability (2,563,144) (1,870,538)
4,821,204 3,528,100

14.2.1 This includes deficit of Rs. 1.486 million (31 December 2015 surplus: Rs. 11.300
million) on revaluation of available for sale securities placed as per arrangements
permissible under Shariah.

45
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
15. CONTINGENCIES AND COMMITMENTS

15.1 Direct credit substitutes


Financial guarantees issued favouring:
– Financial institutions 723,241 462,800
– Others 3,854,207 5,086,805
4,577,448 5,549,605

15.2 Transaction-related contingent liabilities


Guarantees issued favouring:
– Government 32,812,676 29,798,948
– Financial institutions 580,888 668,750
– Others 10,518,483 6,743,423
43,912,047 37,211,121

15.3 Trade-related contingent liabilities


Letters of credit 88,635,361 77,847,579
Acceptances 14,533,323 13,547,110

103,168,684 91,394,689

15.4 Commitments in respect of forward lending


Commitments to extend credit (excluding
commitments that are unilaterally cancellable) 12,901,446 10,748,236
15.5 Commitments in respect of forward exchange
contracts

Purchase 48,399,628 46,760,182

Sale 29,476,967 28,769,804


The maturities of above contracts are spread over
the period upto one year.

15.6 Commitments for the acquisition of operating


fixed assets 663,381 636,406

46
15.7 Other contingencies
Income tax returns of the Bank have been submitted upto and including the Bank’s
financial year 2014. The income tax assessments of the Bank are complete upto tax
year 2013.
For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR)
has passed order u/s. 122(5A) of the Income Tax Ordinance, 2001 by disallowing
certain expenses. Subsequently, amended order was received from ACIR based on
a rectification application filed by the Bank resulting in net aggregate tax impact of
Rs. 797.233 million. The Bank has filed an appeal before the Commissioner Inland
Revenue (Appeals) against the above mentioned orders.
Commissioner Inland Revenue (Appeals) has passed appellate orders for tax years
2009 and 2011 by confirming disallowance of provision for non-performing loans,
other provisions and amortisation of intangible assets having an aggregate tax
impact of Rs. 15.372 million. The Bank has filed an appeal before Income Tax
Appellate Tribunal against the above referred orders.
The management, based on the opinion of its tax advisor, is confident about the
favourable outcome of the above matters.

(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)

16. MARK-UP / RETURN / INTEREST EARNED

On loans and advances to:


Customers 10,590,897 11,071,370 3,562,066 3,534,505
Financial institutions 112,061 90,225 37,953 32,614
10,702,958 11,161,595 3,600,019 3,567,119
On investments:
Available for sale securities 14,507,906 15,660,472 4,774,669 4,818,708
Held to maturity securities 10,864,893 10,751,809 3,000,582 3,847,962
25,372,799 26,412,281 7,775,251 8,666,670

On deposits with financial institutions 159,948 122,697 47,914 41,992


On securities purchased under
resale agreements 52,322 32,936 21,311 12,584
On call money lendings 1,504 521 336 298
36,289,531 37,730,030 11,444,831 12,288,663

16.1 These include Rs. 954.859 million (30 September 2015: Rs. 878.801 million) pertaining to Islamic
banking out of which Rs. 72.245 million (30 September 2015: Rs. 62.944 million) represents profit
from placements permissible under Shariah.
47
(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)
17. MARK-UP / RETURN / INTEREST EXPENSED
Deposits 12,949,273 14,303,965 4,284,019 4,380,899
Sub-ordinated loans 375,732 345,270 71,122 113,243
Repurchase agreement borrowings 3,227,864 3,668,085 847,657 1,147,418
Borrowings from SBP 462,820 774,600 129,326 209,751
Other borrowings 597,460 344,693 203,016 140,218
17,613,149 19,436,613 5,535,140 5,991,529
18. DIVIDEND INCOME
Available for sale
Allied Bank Limited 3,963 4,096 1,321 1,322
Attock Petroleum Limited 7,866 6,166 4,916 4,326
Attock Refinery Limited 500 –00 500 –00
Engro Corporation Limited 1,400 –00 1,400 –00
Engro Fertilizer Limited 800 –00 800 –00
Fatima Fertilizer Company Limited 312 –00 312 –00
Fauji Fertilizer Bin Qasim Limited –00 10,439 –00 3,341
Fauji Fertilizer Company Limited 30,553 29,636 7,207 5,643
First Habib Modaraba –00 647 –00 647
Habib Bank Limited 13,509 8,700 4,502 4,501
Habib Metropolitan Bank Limited 30,055 55,311 –00 30,055
Hub Power Company Limited 63,040 74,851 –00 43,342
Indus Motor Company Limited 836 –00 836 –00
International Industries Limited 238 211 185 132
International Steels Limited 7,029 –00 7,029 –00
Kot Addu Power Company Limited 27,287 15,840 –00 –00
Lalpir Power Limited 4,844 2,094 2,750 –00
MCB Bank Limited 12,000 4,753 4,000 1,584
Meezan Bank Limited –00 357 –00 208
National Investment (Unit) Trust 49,647 46,889 –00 –00
Nishat Chunian Power Limited 17,927 15,753 8,366 –00
NIT Government Bond Fund 36,461 67,089 –00 –00
NIT Government Treasury Fund 998 –00 –00 –00
NIT Income Fund 13,241 21,081 –00 –00
NIT Islamic Equity Fund 10,520 –00 –00 –00
Packages Limited 263 158 –00 –00
Pakgen Power Limited 9,473 4,407 5,066 –00
Pakistan Oilfields Limited 33,218 32,533 18,982 23,727
Pakistan Petroleum Limited 3,987 14,130 –00 7,088
Pakistan State Oil Company Limited 4,573 5,487 –00 –00
Pakistan Telecommunication Company Limited 6,033 –00 6,033 –00
Pakistan Stock Exchange Limited 400 600 –00 –00
PIML Income Fund –00 308 –00 –00
Rafhan Maize Products Company Limited 120 –00 120 –00
Shell Pakistan Limited 360 180 135 –00
Soneri Bank Limited 20,677 11,580 –00 –00
Standard Chartered Bank (Pakistan) Limited 6,366 7,162 2,387 2,387
United Bank Limited 10,550 8,630 3,165 3,165
429,046 449,088 80,012 131,468
48
(Un-audited)
Nine months period ended Quarter ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
(Rupees in '000)
Held for trading
Adamjee Insurance Company Limited –00 150 –00 150
Askari Bank Limited –00 150 –00 150
Dawood Hercules Corporation Limited 450 –00 450 –00
Engro Corporation Limited 1,500 400 525 200
Engro Fertilizer Limited 400 135 400 135
Fauji Cement Company Limited –00 750 –00 750
Fauji Fertilizer Bin Qasim Limited 305 –00 –00 –00
Faysal Bank Limited 100 –00 –00 –00
Indus Motor Company Limited 180 –00 180 –00
Lalpir Power Limited 100 –00 –00 –00
MCB Bank Limited –00 140 –00 –00
Pak Electron Limited 313 125 313 125
Pakgen Power Limited 175 –00 –00 –00
Pakistan Telecommunication Company Limited 1,000 949 200 949
Rafhan Maize Products Company Limited 72 –00 72 –00
United Bank Limited –00 302 –00 302
4,595 3,101 2,140 2,761
433,641 452,189 82,152 134,229
19. BASIC AND DILUTED EARNINGS PER
SHARE ATTRIBUTABLE TO EQUITY
HOLDERS OF THE HOLDING COMPANY
Profit after taxation - attributable to
equity holders of the Holding company 5,438,225 5,227,485 1,659,554 1,968,922
(Number of shares in thousands)
Weighted average number of ordinary shares 1,111,425 1,111,425 1,111,425 1,111,425
(Rupees)
Basic and diluted earnings per share 4.89 4.70 1.49 1.77

(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
20. CASH AND CASH EQUIVALENTS
Cash and balances with treasury banks 49,425,631 39,414,278
Balances with other banks 5,769,967 4,794,699
Overdrawn nostros (524,157 ) (734,430)
54,671,441 43,474,547

49
21. FAIR VALUE OF FINANCIAL INSTRUMENTS
The table below analyses financial instruments measured at the end of reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised:
30 September 2016 (Un-audited)
Carrying amount Fair value
Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total
for sale trading maturity receivables financial financial
assets liabilities
(Rupees in ‘000)
On-balance sheet financial instruments
Financial assets measured at fair value
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds) 292,294,575 –00 –00 –00 –00 –00 292,294,575 –00 292,294,575 –00 292,294,575
Foreign Currency Bonds 1,695,662 –00 –00 –00 –00 –00 1,695,662 –00 1,695,662 –00 1,695,662
Fully paid-up ordinary shares - Listed 6,256,684 290,508 –00 –00 –00 –00 6,547,192 6,749,214 –00 –00 6,749,214
Units of mutual funds 1,797,662 –00 –00 –00 –00 –00 1,797,662 1,797,662 –00 –00 1,797,662
Term Finance Certificates - Listed 701,639 –00 –00 –00 –00 –00 701,639 701,639 –00 –00 701,639

Financial assets not measured at fair value


- Cash and bank balances with treasury banks –00 –00 –00 –00 49,425,631 –00 49,425,631 –00 –00 –00 –00
- Balances with other banks –00 –00 –00 –00 5,769,967 –00 5,769,967 –00 –00 –00 –00
- Lendings to financial institutions –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds + TFC + Others) 3,203,571 –00 95,282,960 –00 –00 –00 98,486,531 –00 107,096,101 –00 107,096,101
Foreign Currency Bonds –00 –00 521,149 –00 –00 –00 521,149 –00 522,793 –00 522,793
Sukuk Bonds 2,866,660 –00 154,984 –00 –00 –00 3,021,644 –00 –00 –00 –00
Fully paid-up ordinary shares - Un-listed 59,652 –00 –00 –00 –00 –00 59,652 –00 –00 –00 –00
Term Finance Certificates - Un-listed 832,230 –00 –00 –00 –00 –00 832,230 –00 –00 –00 –00
Associates
Listed shares –00 –00 –00 –00 416,191 –00 416,191 392,242 –00 –00 392,242
Mutual funds –00 –00 –00 –00 301,152 –00 301,152 301,152 –00 –00 301,152
Un-listed shares –00 –00 –00 –00 83,965 –00 83,965 –00 –00 –00 –00
- Advances –00 –00 –00 237,488,033 –00 –00 237,488,033 –00 –00 –00 –00
- Other assets –00 –00 –00 –00 6,797,515 –00 6,797,515 –00 –00 –00 –00
309,708,335 290,508 95,959,093 237,488,033 62,794,421 –00 706,240,390 9,941,909 401,609,131 –00 411,551,040

Financial liabilities not measured at fair value


- Deposits and other accounts –00 –00 –00 –00 –00 (574,026,063 ) (574,026,063 ) –00 –00 –00 –00
- Bills payable –00 –00 –00 –00 –00 (11,671,333 ) (11,671,333 ) –00 –00 –00 –00
- Borrowings –00 –00 –00 –00 –00 (80,732,088 ) (80,732,088 ) –00 –00 –00 –00
- Sub - ordinated loans –00 –00 –00 –00 –00 (3,999,200 ) (3,999,200 ) –00 –00 –00 –00
- Other liabilities –00 –00 –00 –00 –00 (7,176,401 ) (7,176,401 ) –00 –00 –00 –00
–00 –00 –00 –00 –00 (677,605,085 ) (677,605,085 ) –00 –00 –00 –00
309,708,335 290,508 95,959,093 237,488,033 62,794,421 (677,605,085 ) 28,635,305 9,941,909 401,609,131 –00 411,551,040

50
31 December 2015 (Audited)
Carrying amount Fair value
Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total
for sale trading maturity receivables financial financial
assets liabilities
(Rupees in ‘000)
On-balance sheet financial instruments
Financial assets measured at fair value
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds) 208,365,391 –00 –00 –00 –00 –00 208,365,391 –00 208,210,579 –00 208,210,579
Foreign Currency Bonds 627,606 –00 –00 –00 –00 –00 627,606 –00 627,606 –00 627,606
Fully paid-up ordinary shares - Listed 4,589,414 –00 –00 –00 –00 –00 4,589,414 4,791,436 –00 –00 4,791,436
Units of mutual funds 1,638,758 –00 –00 –00 –00 –00 1,638,758 1,638,758 –00 –00 1,638,758
Term Finance Certificates - Listed 705,764 –00 –00 –00 –00 –00 705,764 705,764 –00 –00 705,764

Financial assets not measured at fair value


- Cash and bank balances with treasury banks –00 –00 –00 –00 38,577,760 –00 38,577,760 –00 –00 –00 –00
- Balances with other banks –00 –00 –00 –00 3,204,284 –00 3,204,284 –00 –00 –00 –00
- Lendings to financial institutions –00 –00 –00 –00 3,992,794 –00 3,992,794 –00 –00 –00 –00
- Investments
Federal Government Securities
(TBills + PIBs + Sukuk Bonds + FC Bonds + TFC + Others) 1,964,286 –00 134,691,407 –00 –00 –00 136,655,693 –00 146,203,123 –00 146,203,123
Foreign Currency Bonds –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Sukuk Bonds 2,472,178 –00 172,888 –00 –00 –00 2,645,066 –00 –00 –00 –00
Fully paid-up ordinary shares - Un-listed 59,652 –00 –00 –00 –00 –00 59,652 –00 –00 –00 –00
Term Finance Certificates - Un-listed 832,400 –00 –00 –00 –00 –00 832,400 –00 –00 –00 –00
Associates
Listed shares –00 –00 –00 –00 396,615 –00 396,615 357,876 –00 –00 357,876
Mutual funds –00 –00 –00 –00 306,171 –00 306,171 306,171 –00 –00 306,171
Un-listed shares –00 –00 –00 –00 84,236 –00 84,236 –00 –00 –00 –00
- Advances –00 –00 –00 207,288,807 –00 –00 207,288,807 –00 –00 –00 –00
- Other assets –00 –00 –00 –00 13,144,091 –00 13,144,091 –00 –00 –00 –00
221,255,449 –00 134,864,295 207,288,807 59,705,951 –00 623,114,502 7,800,005 355,041,308 –00 362,841,313
Financial liabilities not measured at fair value
- Deposits and other accounts –00 –00 –00 –00 –00 (516,197,547) (516,197,547 ) –00 –00 –00 –00
- Bills payable –00 –00 –00 –00 –00 (8,665,462) (8,665,462 ) –00 –00 –00 –00
- Borrowings –00 –00 –00 –00 –00 (62,592,299) (62,592,299 ) –00 –00 –00 –00
- Sub - ordinated loans –00 –00 –00 –00 –00 (2,994,600) (2,994,600 ) –00 –00 –00 –00
- Other liabilities –00 –00 –00 –00 –00 (5,727,105) (5,727,105) –00 –00 –00 –00
–00 –00 –00 –00 –00 (596,177,013) (596,177,013) –00 –00 –00 –00
221,255,449 –00 134,864,295 207,288,807 59,705,951 (596,177,013) 26,937,489 7,800,005 355,041,308 –00 362,841,313

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs).

51
22. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

The segment analysis with respect to business activity is as follows:

Nine months period ended 30 September 2016 (Un-audited)


Retail Commercial Retail Inter Segment Total
Banking Banking Brokerage Elimination
(Rupees in '000)

Total income 18,585,404 33,194,081 39,900 (12,153,506) 39,665,879


Total expenses (13,137,658) (29,239,913 ) (41,058) 12,153,506 (30,265,123)
Net income 5,447,746 3,954,168 (1,158) –000 9,400,756

Segment assets (net of provisions) 580,505,706 681,993,241 386,480 (537,019,587) 725,865,840


Segment non performing loans 96,888 5,710,904 –00 –00 5,807,792
Segment provision required 42,992 4,512,729 –00 –00 4,555,721
Segment liabilities 578,513,577 643,112,022 218,706 (537,019,587) 684,824,718
Segment return on assets (ROA) (%)* 3.20% 4.87% 10.32%
Segment cost of funds (%)* 2.27% 4.55% 18.77%

AL Habib Credit & Finance (Hong Kong) Limited has not commenced operations.

Nine months period ended 30 September 2015 (Un-audited)


Retail Commercial Retail Inter Segment Total
Banking Banking Brokerage Elimination
(Rupees in '000)

Total income 17,718,210 36,154,787 52,841 (12,780,568) 41,145,270


Total expenses (13,578,944) (31,314,527 ) (47,150) 12,780,568 (32,160,053)
Net income 4,139,266 4,840,260 5,691 –000 8,985,217

Segment assets (net of provisions) 461,885,278 621,589,702 357,302 (434,728,674) 649,103,608


Segment non performing loans 43,403 5,845,281 –00 –00 5,888,684
Segment provision required 38,468 5,108,970 –00 –00 5,147,438
Segment liabilities 460,376,178 586,725,200 186,909 (434,728,674) 612,559,613
Segment return on assets (ROA) (%)* 3.84% 5.82% 14.79%
Segment cost of funds (%)* 2.95% 5.34% 25.23%

* These percentages have been computed based on closing assets / liabilities figures.

52
23. RELATED PARTY TRANSACTIONS
Related parties of the Group comprise associates (including entities having directors in common with the Group), retirement
benefit funds, major shareholders, directors and key management personnel and their close family members.
Transactions with related parties of the Group are carried out on an arm's length basis in terms of the policy as approved
by the Board of Directors. The transactions with employees of the Group are carried out in accordance with the terms of
their employment.
Transactions for the period / year end balances outstanding as at the period / year end with related parties are summarised
as follows:
30 September 2016 (Un-audited)
Associates Non Key Retirement Total
Executive Management Benefit
Directors Personnel Funds
(Rupees in ‘000)
Deposits
At beginning of the period 3,398,002 183,973 432,539 325,824 4,340,338
Placements during the period 86,666,504 1,948,629 1,852,249 2,458,128 92,925,510
Withdrawals during the period (85,907,195 ) (1,830,272) (1,658,114) (2,155,098) (91,550,679)
At end of the period 4,157,311 302,330 626,674 628,854 5,715,169
Advances
At beginning of the period 978,041 144 54,478 –000 1,032,663
Given during the period 20,692,324 4,019 72,685 –000 20,769,028
Repaid during the period (20,315,613 ) (2,688) (61,681) –000 (20,379,982)
At end of the period 1,354,752 1,475 65,482 –000 1,421,709
Investments
At beginning of the period 787,022 –000 –000 –000 787,022
Investments made during the period –000 –000 –000 –000 –000
Investments redeemed during the period 14,286 –000 –000 –000 14,286
At end of the period 801,308 –000 –000 –000 801,308

Contingencies and commitments 743,362 –000 –000 –000 743,362

31 December 2015 (Audited)


Deposits
At beginning of the year 3,037,277 185,609 401,895 49,441 3,674,222
Placements during the year 157,951,585 2,932,874 2,817,436 2,922,398 166,624,293
Withdrawals during the year (157,590,860 ) (2,934,510) (2,786,792) (2,646,015) (165,958,177)
At end of the year 3,398,002 183,973 432,539 325,824 4,340,338
Advances
At beginning of the year 1,517,483 294 52,960 –00 1,570,737
Given during the year 22,453,719 2,790 72,596 –00 22,529,105
Repaid during the year (22,993,161 ) (2,940) (71,078) –00 (23,067,179)
At end of the year 978,041 144 54,478 –00 1,032,663
Investments
At beginning of the year 1,158,614 –00 –00 –00 1,158,614
Investments made during the year 548,287 –00 –00 –00 548,287
Investments redeemed during the year (919,879 ) –00 –00 –00 (919,879)
At end of the year 787,022 –00 –00 –00 787,022

Contingencies and commitments 749,299 –00 –00 –00 749,299

53
Nine months period ended 30 September 2016 (Un-audited)
Associates Non Key Retirement Total
Executive Management Benefit
Directors Personnel Funds
(Rupees in '000)
Forward purchase contracts 161,315 –00 –00 –00 161,315
Other receivable –00 –00 712 –00 712
Other payable –00 –00 8,116 –00 8,116
Unrealised loss on forward contracts 2,233 –00 –00 –00 2,233
Purchase of securities –00 –00 –00 –00 –00
Purchase of mutual funds –00 –00 –00 –00 –00
Sale of securities 25,243 –00 –00 615,758 641,001
Redemption of mutual funds –00 –00 –00 –00 –00
Gain on sale of securities & mutual funds –00 –00 –00 –00 –00
Mark-up earned 52,028 –00 2,451 –00 54,479
Mark-up expensed 137,807 10,480 21,088 25,105 194,480
Bank charges and commission 3,835 8 41 –00 3,884
Salaries and allowances –00 –00 287,760 –00 287,760
Bonus –00 –00 34,002 –00 34,002
Contribution to defined contribution plan –00 –00 11,447 –00 11,447
Contribution to defined benefit plan –00 –00 51,539 –00 51,539
Staff provident fund –00 –00 –00 239,072 239,072
Staff gratuity fund –00 –00 –00 162,000 162,000
Directors’ fee –00 6,600 –00 –00 6,600
Insurance claim received 12,175 –00 –00 –00 12,175
Insurance premium paid 132,053 –00 –00 –00 132,053
Dividend income 41,792 –00 –00 –00 41,792
Rental paid –00 –00 –00 –00 –00
Brokerage and advisory income 695 –00 22 –00 717
Donation 109,900 –00 –00 –00 109,900
Other expensed 5,104 –00 –00 –00 5,104
Other income 202 –00 –00 88 290
Nine months period ended 30 September 2015 (Un-audited)

Forward purchase contracts –00 –00 –00 –00 –00


Other receivable –00 –00 –00 –00 –00
Other payable –00 –00 –00 –00 –00
Unrealised loss on forward contracts –00 –00 –00 –00 –00
Purchase of securities 1,713 –00 –00 –00 1,713
Purchase of mutual funds 546,574 –00 –00 –00 546,574
Sale of securities 8,023 –00 –00 36,936 44,959
Redemption of mutual funds 936,356 –00 –00 –00 936,356
Gain on sale of securities & mutual funds 84,782 –00 –00 –00 84,782
Mark-up earned 82,857 3 2,336 –00 85,196
Mark-up expensed 128,616 11,180 22,632 3,481 165,909
Bank charges and commission 2,603 9 696 –00 3,308
Salaries and allowances –00 –00 243,254 –00 243,254
Bonus –00 –00 43,984 –00 43,984
Contribution to defined contribution plan –00 –00 11,277 –00 11,277
Contribution to defined benefit plan –00 –00 21,492 –00 21,492
Staff provident fund –00 –00 –00 196,689 196,689
Staff gratuity fund –00 –00 –00 126,000 126,000
Directors’ fee –00 5,675 –00 –00 5,675
Insurance claim received 11,681 –00 –00 –00 11,681
Insurance premium paid 130,624 –00 –00 –00 130,624
Dividend income 70,740 –00 –00 –00 70,740
Rental paid 1,538 –00 –00 –00 1,538
Brokerage and advisory income 693 –00 –00 –00 693
Donation 100 –00 –00 –00 100
Other expensed 3,213 –00 –00 –00 3,213
Other income 120 –00 –00 80 200

54
24. ISLAMIC BANKING BUSINESS

24.1 The Bank is operating 37 (31 December 2015: 29) Islamic Banking branches in Pakistan.
The statement of financial position of these branches as at 30 September 2016 is as follows:

(Un-audited) (Audited)
30 September 31 December
2016 2015
Note (Rupees in ‘000)
ASSETS
Cash and balances with treasury banks 1,449,826 882,606
Balances with and due from financial institutions 1,673,794 744,861
Investments 8,090,531 5,594,911
Islamic financing and related assets 24.2 13,129,770 11,980,951
Operating fixed assets 161,268 134,795
Other assets 243,020 244,172

24,748,209 19,582,296

LIABILITIES
Bills payable 72,087 8,452
Due to financial institutions 1,687,928 2,734,239
Deposits and other accounts 18,856,513 14,718,557
– Current accounts 6,703,703 4,797,701
– Saving accounts 5,698,658 3,675,740
– Term deposits 5,041,369 5,152,092
– Others 66,859 71,726
– Deposits from financial institutions-remunerative 1,345,211 1,019,316
– Deposits from financial institutions-non-remunerative 713 1,982
Due to Head office 311,432 1,490
Other liabilities 1,561,063 427,968
(22,489,023 ) (17,890,706)
NET ASSETS 2,259,186 1,691,590

REPRESENTED BY:
Islamic banking fund 2,200,000 1,500,000
Unremitted profit 60,672 180,290
2,260,672 1,680,290
(Deficit) / surplus on revaluation of assets (1,486 ) 11,300

2,259,186 1,691,590

55
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
24.2 Islamic financing and related assets
Murabaha 2,104,673 2,850,625
Net book value of assets / investments in ijarah under IFAS 2 1,321,469 695,688
Diminishing musharika 5,494,490 3,639,528
Musawama 646,313 274,033
Export refinance murabaha –00 32,351
Export refinance istisna 1,998,167 2,491,638
Istisna 618,821 568,922
Gross financing 12,183,933 10,552,785
Advance against murabaha 352,875 1,176,821
Advance against ijarah 596,958 253,129
Islamic financing and related assets - gross 13,133,766 11,982,735
Less: general provisioning against consumer financing (3,996 ) (1,784)
Islamic financing and related assets - net of provision 13,129,770 11,980,951

24.3 Islamic mode of financing


Financings / inventory / receivables 12,183,933 10,552,785
Advances 949,833 1,429,950
Less: general provisioning against consumer financing (3,996 ) (1,784)
13,129,770 11,980,951
24.4 The profit and loss account of the Bank's Islamic Banking branches for the nine months
period ended 30 September 2016 is as follows:
(Un-audited)
Nine months period ended
30 September 30 September
2016 2015
(Rupees in ‘000)
Profit / return on financing and placements earned 954,859 878,801
Profit / return on deposits and other dues expensed (483,999) (477,134)
470,860 401,667

Provision against non-performing loans and advances (2,212 ) (532)


Net spread earned 468,648 401,135

OTHER INCOME
Fee, commission and brokerage income 50,734 30,404
Dividend income 1,654 –00
Income from dealing in foreign currencies 13,755 7,309
Other income 14,818 10,617
80,961 48,330
OTHER EXPENSES
Administrative expenses (488,937 ) (296,611)
PROFIT BEFORE TAXATION 60,672 152,854
24.5 Remuneration to Shariah Board / Advisor 3,726 1,800
56
(Un-audited) (Audited)
30 September 31 December
2016 2015
(Rupees in ‘000)
24.6 CHARITY FUND
Opening balance 2,686 2,621
Additions during the period / year 2,115 2,686
Payment / utilisation during the period / year
Health –00 (1,021)
Social welfare (1,556 ) (1,600)
(1,556 ) (2,621 )
Closing balance 3,245 2,686

25. GENERAL

25.1 SBP has issued BPRD Circular Letter No. 5 dated February 29, 2016 regarding the classification
of Islamic financing and related assets. Accordingly, prior year numbers have been reclassified as
follows:

- Bai Muajjal of Rs. 1,825.278 million has been reclassified from Lendings to Financial Institutions
to Investments.

- Islamic receivables carried in Other assets of Rs. 1,429.950 million have been reclassified to
Advances.

No other major reclassifications were made during the period.

25.2 Figures have been rounded off to the nearest thousand rupees unless, otherwise stated.

26. DATE OF AUTHORISATION

These consolidated condensed interim financial statements were authorised for issue in the Board
of Directors' meeting held on 20 October 2016.

ALI RAZA D. HABIB ABBAS D. HABIB SYED MAZHAR ABBAS ANWAR HAJI KARIM
Chairman Chief Executive and Director Director
Managing Director

57

You might also like